[LOGO}
Tax Free
Short/Intermediate
Fixed Income Fund
SEMI-ANNUAL REPORT
December 31, 1997
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
(unaudited)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
----------- -------- ------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS (99.8%)
ESCROWED TO MATURITY (a) (3.9%)
$ 100,000 Berks County, Pennsylvania, Industrial
Development Authority .................................. 4/1/98 7.250% $ 100,814
50,000 Chicago, Illinois, Public Building Community Revenue ..... 1/1/98 7.500 50,000
150,000 Chicago, Illinois, Wastewater Transmission Revenue ....... 11/15/98 6.700 153,630
165,000 Fairfield, Ohio, Economic Development..................... 12/1/98 10.500 174,707
200,000 Metropolitan Government, Nashville, Tennessee............. 7/1/98 6.800 203,092
2,150,000 New Jersey State Transportation Authority ................ 6/15/00 6.000 2,249,007
-----------
TOTAL ESCROWED TO MATURITY ............................ $ 2,931,250
-----------
GENERAL OBLIGATIONS (12.2%)
$1,500,000 Delaware County, Pennsylvania............................. 11/15/02 6.000% $ 1,610,625
175,000 Delaware State............................................ 5/1/98 6.000 176,704
1,000,000 El Paso, Texas ........................................... 8/15/01 7.000 1,095,590
200,000 Florida State............................................. 7/1/99 6.875 208,450
1,000,000 Hawaii State.............................................. 11/1/01 5.850 1,060,490
100,000 Maine Municipal Bond Bank................................. 11/1/99 7.100 105,200
500,000 Maryland State............................................ 7/15/99 6.400 551,310
1,000,000 Massachusetts State ...................................... 11/1/01 5.500 1,048,240
585,000 New Jersey State ......................................... 9/15/99 6.250 607,546
2,000,000 San Antonio, Texas ....................................... 8/1/02 8.000 2,311,300
275,000 Washington State ......................................... 1/1/01 6.500 293,849
-----------
TOTAL GENERAL OBLIGATIONS .............................. $ 9,069,304
-----------
PRE-REFUNDED (a) (75.5%)
$1,275,000 Akron, Ohio, Bath Copley Township Hospital ............... 11/15/00 7.250% $ 1,408,556
500,000 Anchorage, Alaska Tel Revenue ............................ 11/1/00 7.100 549,135
400,000 Arizona State ............................................ 7/1/02 7.000 448,676
515,000 Augusta, Georgia Water and Sewer Revenue ................. 5/1/02 6.500 568,833
125,000 Aurora, Illinois ......................................... 1/1/99 7.000 128,711
300,000 Austin, Texas, Utility System Revenue..................... 9/1/99 7.000 314,232
200,000 Berkeley County, South Carolina, Water & Sewer
Revenue................................................. 6/1/01 7.000 222,058
550,000 Boston, Massachusetts .................................... 2/1/00 7.375 596,283
35,000 Buncombe County, North Carolina .......................... 2/1/98 7.100 35,779
500,000 Chicago, Illinois ........................................ 7/1/02 6.850 558,795
1,000,000 Chicago, Illinois ........................................ 7/1/02 6.850 1,117,590
1,000,000 Cook County, Illinois..................................... 11/15/02 6.300 1,105,370
15,000 Dade County, Florida, Public Facility Revenue............. 6/1/98 7.875 15,549
210,000 Delaware County, Pennsylvania, Hospital Revenue .......... 8/15/99 7.125 224,223
105,000 Delaware County, Pennsylvania, Hospital Revenue .......... 8/15/99 7.200 112,232
20,000 Delaware Transportation Authority System Revenue.......... 7/1/98 7.500 20,667
465,000 Delaware Transportation Authority System Revenue ......... 7/1/01 6.000 493,425
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997 (continued)
(unaudited)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
----------- -------- ------- ------------
<S> <C> <C> <C>
Pre-Refunded (continued)
$1,500,000 Denver, Colorado, City and County......................... 11/15/02 7.500% $ 1,740,330
525,000 District of Columbia, General Obligation.................. 12/1/98 7.750 552,867
250,000 District of Columbia, General Obligation ................. 6/1/00 6.875 269,943
200,000 Downtown Savannah Authority, Georgia Revenue.............. 1/1/99 6.800 209,506
45,000 Duluth, Minnesota......................................... 3/1/98 10.500 45,455
1,000,000 Florence County, South Carolina, Public Facility.......... 3/1/00 7.600 1,083,080
500,000 Florida State Department of National Resource
Preservation ........................................... 7/1/01 6.700 550,505
1,050,000 Fort Worth, Texas ........................................ 3/1/00 6.500 1,101,786
50,000 Fulton County, Georgia, Water & Sewer Revenue ............ 1/1/98 8.250 51,000
110,000 Georgia Municipal Electric Authority Power Revenue ....... 1/1/98 8.000 112,200
400,000 Goshen, Indiana, Middle School............................ 12/30/98 7.800 423,004
295,000 Greater Orlando, Aviation Authority, Florida Revenue ..... 10/1/98 8.375 310,305
200,000 Greensburg-Salem, Pennsylvania, School District .......... 1/1/99 7.100 206,130
125,000 Gwinnett County, Georgia, Water & Sewer Revenue .......... 8/1/98 6.700 129,574
400,000 Harris County, Texas...................................... 2/1/98 10.375 401,800
100,000 Harris County, Texas...................................... 2/15/98 8.125 103,458
45,000 Harris County, Texas ..................................... 2/15/98 8.125 46,556
1,000,000 Harris County, Texas...................................... 10/1/98 5.750 1,013,950
1,000,000 Harris County, Texas...................................... 10/1/02 5.750 1,064,240
125,000 Hawaii State.............................................. 6/1/98 7.000 128,549
1,745,000 Honolulu, Hawaii, City & County........................... 6/1/00 7.250 1,889,469
970,000 Hudson County, New Jersey, Correctional Facility.......... 12/1/98 7.600 1,022,002
590,000 Illinois Health Facility Authority ....................... 4/1/99 7.375 624,963
200,000 Illinois State ........................................... 6/1/98 7.750 207,132
500,000 Illinois State Sales Tax Revenue.......................... 6/15/99 6.800 528,850
500,000 Illinois State University Revenue......................... 10/1/99 7.400 537,090
1,007,000 Indiana Transportation Finance Authority.................. 11/1/02 6.250 1,110,771
75,000 Indianapolis, Indiana, Public Improvement................. 2/1/98 8.500 76,738
1,000,000 Indianapolis, Indiana, Public Improvement................. 1/1/02 6.700 1,105,870
500,000 Intermountain Power Agency, Utah.......................... 7/1/99 7.200 532,285
710,000 Kentucky Infrastructure Authority......................... 8/1/99 7.625 761,518
500,000 Kentucky State Property & Building........................ 2/1/01 6.875 548,445
1,000,000 Kentucky State Turnpike Authority ........................ 5/15/00 7.250 1,085,330
250,000 King County, Washington................................... 12/1/00 6.750 267,943
280,000 Lake County, Illinois, Forest Preservation District ...... 2/1/98 6.850 286,174
385,000 Maine Municipal Bond Bank................................. 11/1/98 7.400 406,314
200,000 Maine Municipal Bond Bank ................................ 11/1/98 7.850 212,274
1,000,000 Martinsville, Virginia, Industrial Developement Authority 1/1/01 7.000 1,080,720
500,000 Maryland State Health Facilities Authority ............... 7/1/01 6.750 518,400
575,000 Maryland Water Quality Financing Authority ............... 9/1/00 7.250 631,902
50,000 Massachusetts Bay Transportation Authority................ 3/1/98 7.500 51,284
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997 (continued)
(unaudited)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
----------- -------- ------- ------------
<S> <C> <C> <C>
Pre-Refunded (continued)
$1,150,000 Massachusetts State Health & Education Facility .......... 7/1/00 8.000% $ 1,278,662
500,000 Massachusetts State Industrial Finance Agency Revenue..... 9/1/99 7.250 535,485
155,000 Massachusetts State Water Reserves........................ 4/1/00 7.625 169,798
100,000 Michigan City, Indiana, Area Schools ..................... 6/15/98 7.875 103,774
100,000 Michigan State Hospital Finance Authority ................ 8/15/98 8.000 104,512
230,000 Middlesex County, New Jersey,
Utilities Authority Sewer Revenue....................... 3/15/01 6.500 251,105
290,000 Montgomery County, Maryland............................... 4/1/98 7.100 298,079
320,000 Montgomery County, Maryland............................... 6/1/98 7.000 324,288
655,000 Montgomery County, Maryland............................... 9/1/98 8.900 676,490
1,000,000 Myrtle Beach, South Carolina, Water & Sewer Revenue ...... 3/1/00 7.000 1,080,020
465,000 New York State Dormitory Authority Revenue ............... 7/1/00 7.700 513,755
400,000 New York State Dormitory Authority Revenue ............... 5/15/02 6.750 446,884
165,000 New York State Local Government Assistance Corp. ......... 4/1/01 7.250 183,747
140,000 New York State Medical Care Facilities
Finance Agency Revenue ................................. 2/15/01 7.500 156,436
145,000 Ohio State Building Authority,
Correctional Facility, Series A......................... 8/1/99 7.350 155,152
2,000,000 Ohio State Building Authority,
Correctional Facility, Series A......................... 8/1/99 7.350 2,140,020
100,000 Pennsylvania State........................................ 2/1/98 7.250 101,737
200,000 Philadelphia, Pennsylvania, Gas Works Revenue ............ 1/1/99 6.750 209,310
500,000 Phoenix, Arizona, General Obligation...................... 7/1/99 6.750 529,070
115,000 Piedmont Municipal Power Agency, South Carolina
Revenue Bonds........................................... 1/1/98 7.600 117,300
500,000 Price Elliot Resh Park, Arizona........................... 7/1/01 7.000 555,330
1,000,000 Richland County, South Carolina........................... 3/1/00 6.750 1,073,830
300,000 Richland County, South Carolina .......................... 10/1/00 6.500 324,207
145,000 Richmond, Virginia, Public Utility Revenue ............... 1/15/98 8.000 148,055
240,000 Salt River, Arizona, Electrical Systems Revenue .......... 1/1/98 8.250 240,000
115,000 San Antonio, Texas, Electric & Gas Revenue ............... 2/1/98 8.000 117,630
1,000,000 Springfield, Illinois..................................... 12/1/99 6.300 1,040,750
1,000,000 Sullivan County, Tennessee, Health,
Education & Housing Facility............................ 2/15/00 7.200 1,082,840
250,000 Swarthmore Boro Authority, Pennsylvania,
College Revenue......................................... 9/15/98 7.375 259,852
115,000 Texas State............................................... 4/1/00 7.125 124,631
400,000 Texas State............................................... 10/1/00 6.500 424,576
100,000 Texas State............................................... 10/1/98 6.500 101,970
1,000,000 Tucson, Arizona, Street & Highway User Revenue ........... 7/1/00 6.750 1,072,290
1,000,000 Tucson, Arizona, Street & Highway User Revenue ........... 7/1/00 6.875 1,075,210
1,000,000 Tucson, Arizona, Street & Highway User Revenue ........... 7/1/00 6.875 1,075,210
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997 (continued)
(unaudited)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
----------- -------- ------- ------------
<S> <C> <C> <C>
Pre-Refunded (continued)
$1,000,000 University of Arizona, Revenue Bonds ..................... 6/1/00 6.900% $ 1,082,740
755,000 University of Pittsburg, Pennsylvania..................... 6/1/02 6.125 823,803
210,000 University of Virginia, Hospital Revenue Bonds............ 6/1/98 7.150 217,077
325,000 Virginia State Public School Authority.................... 1/1/98 7.000 331,500
400,000 Virginia State Transportation Board Revenue............... 5/15/98 6.800 412,300
2,000,000 Washington State.......................................... 2/1/02 6.375 2,170,160
400,000 Washington Suburban Sanitation District, Maryland......... 6/1/01 6.900 442,856
500,000 Wisconsin State........................................... 5/1/02 6.000 534,160
555,000 Wisconsin State........................................... 5/1/02 6.300 599,422
270,000 Wisconsin Public Power System, Power Revenue.............. 7/1/00 7.400 296,071
200,000 Wisconsin Health & Educational Facility Authority
Revenue................................................. 11/15/98 7.625 210,346
100,000 Wisconsin Health & Educational Facility Authority
Revenue................................................. 8/15/99 7.400 107,115
-----------
TOTAL PRE-REFUNDED .................................... $56,269,381
-----------
TRANSPORTATION (1.7%)
$ 550,000 Illinois State Toll Highway............................... 1/1/99 4.400% $ 552,420
750,000 Illinois State Toll Highway............................... 1/1/99 4.400 752,430
-----------
TOTAL TRANSPORTATION .................................. $ 1,304,850
-----------
UTILITIES (4.9%)
$ 500,000 San Antonio, Texas, Electric & Gas....................... 2/1/01 5.250% $ 516,990
1,000,000 Washington State Public Power Supply...................... 7/1/99 7.200 1,044,390
1,000,000 Washington State Public Power Supply...................... 7/1/01 7.625 1,105,210
1,000,000 Washington State Public Power Supply ..................... 7/1/02 5.000 1,023,330
-----------
TOTAL UTILITIES ........................................ $ 3,689,920
-----------
WATER/SEWER (1.6%)
$ 180,000 Houston, Texas, Water & Sewer Systems..................... 12/1/99 5.250% $ 183,942
500,000 Houston, Texas, Water & Sewer Systems..................... 12/1/01 5.600 525,665
275,000 Massachusetts Water Resources Authority................... 12/1/01 6.300 295,985
150,000 Ocean County, New Jersey, Utilities Authority............. 1/1/01 6.125 158,843
-----------
TOTAL WATER/SEWER ..................................... $ 1,164,435
-----------
TOTAL MUNICIPAL BONDS (identified
cost $73,972,435) .................................... $74,429,140
-----------
</TABLE>
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997 (continued)
(unaudited)
<TABLE>
<CAPTION>
Principal Maturity Interest
Amount Date Rate Value
----------- -------- ------- ------------
<S> <C> <C> <C>
VARIABLE & FLOATING RATE INSTRUMENTS (b) (0.3%)
$ 200,000 New York City, New York,
General Obligation (identified cost $200,000)............. 1/2/98 3.700% $ 200,000
-----------
TOTAL INVESTMENTS, (identified cost $74,172,435) (c) ............................ 100.1% $74,629,140
CASH AND OTHER ASSETS LESS LIABILITIES .......................................... (0.1) (51,626)
------ -----------
NET ASSETS ..................................................................... 100.0% $74,577,514
====== ===========
</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 with Morgan Guaranty Trust.
(c) The aggregate cost for federal income tax purposes is $74,172,435 the
aggregate gross unrealized appreciation is $469,077, and the aggregate gross
unrealized depreciation is $12,372 resulting in net unrealized appreciation
of $456,705.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
(unaudited)
ASSETS:
Investments in securities, at value (identified cost
$74,172,435) (Note 1) ................................. $ 74,629,140
Receivables for:
Investments sold ..................................... 2,229,425
Interest ............................................. 1,472,820
Fund shares sold ..................................... 308,622
------------
Total Assets ..................................... 78,640,007
------------
LIABILITIES:
Due to bank ............................................. 71,047
Payables for:
Investments purchased ................................. 3,955,927
Fund shares repurchased ............................... 15,965
Investment advisory fee (Note 2) ...................... 15,588
Administrative fee (Note 2) ........................... 3,966
------------
Total Liabilities ................................ 4,062,493
------------
NET ASSETS .................................................... $ 74,577,514
============
Net Assets Consist of:
Paid-in capital ......................................... $ 74,340,295
Accumulated net realized loss on investments ............ (219,486)
Net unrealized appreciation on investments .................... 456,705
------------
Net Assets .................................................... $ 74,577,514
============
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($74,577,514 / 7,184,791 shares) ........................ $10.38
======
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, 1997
(unaudited)
NET INVESTMENT INCOME:
Income:
Interest ................................................ $ 1,474,143
-----------
Expenses:
Investment advisory fee (Note 2) ........................ 86,673
Shareholder servicing/Eligible institution fees (Note 2) 86,673
Administrative fee (Note 2) ............................. 52,004
Professional fees ....................................... 11,750
Custodian fee ........................................... 22,792
Trustees fees and expenses (Note 2) ..................... 2,141
Miscellaneous expenses .................................. 5,458
Amortization of organization expenses (Note 1) .......... 516
-----------
Total Expenses .......................................... 268,007
Fees paid indirectly (Note 3) ......................... (7,087)
-----------
Net Expenses ....................................... 260,920
-----------
Net Investment Income .............................. 1,213,223
-----------
NET REALIZED AND UNREALIZED GAIN (Notes 1 and 3):
Net realized gain on investments .......................... 2,027
Net change in unrealized appreciation on investments ............ 303,821
-----------
Net Realized and Unrealized Gain ................... 305,848
-----------
Net Increase in Net Assets Resulting from Operations ...... $ 1,519,071
===========
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, 1997 year ended
(unaudited) June 30, 1997
----------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income..................................... $ 1,213,223 $ 1,916,749
Net realized gain on investments.......................... 2,027 87,362
Net change in unrealized appreciation on investments...... 303,821 181,392
------------ ------------
Net increase in net assets resulting from operations . 1,519,071 2,185,503
------------ ------------
Dividends declared from net investment income............... (1,213,223) (1,916,749)
------------ ------------
Shares of beneficial interest transactions (Note 4):
Net proceeds from sales of shares of beneficial interest.. 36,449,009 41,560,915
Net asset value of shares of beneficial interest
issued to shareholders in reinvestment of
dividends .............................................. 536,129 817,854
Net cost of shares of beneficial interest repurchased..... (18,427,084) (31,709,988)
------------ ------------
Net increase in net assets resulting from shares of
beneficial interest transactions ..................... 18,558,054 10,668,781
------------ ------------
Total increase in net assets........................ 18,863,902 10,937,535
NET ASSETS:
Beginning of year........................................... 55,713,612 44,776,077
------------ ------------
End of year ................................................ $ 74,577,514 $ 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 period
<TABLE>
<CAPTION>
For the period
For the July 23, 1992
six months ended For the years ended June 30, (commencement of
December 31, 1997 --------------------------------- operations) to
(unaudited) 1997 1996 1995 1994 June 30, 1993
---------------- ------- ------- ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $10.33 $10.26 $10.28 $10.11 $10.29 $10.00
Income from investment operations:
Net investment income............... 0.18 0.37 0.37 0.37 0.34 0.32
Net realized and unrealized
gain (loss) on investments........ 0.05 0.07 (0.02) 0.17 (0.18) 0.29
Less dividends and distributions:
Dividends to shareholders from
net investment income............. (0.18) (0.37) (0.37) (0.37) (0.34) (0.32)
Distributions to shareholders from
net realized gains on investments. -- -- -- -- (0.00)(1) --
------ ------ ------ ------ ------ ------
Net asset value, end of period......... $10.38 $10.33 $10.26 $10.28 $10.11 $10.29
====== ====== ====== ====== ====== ======
Total return ......................... 2.26% 4.34% 3.60% 5.42% 1.59% 6.16%
Ratios/Supplemental Data:
Net assets, end of period
(000's omitted)................... $74,578 $55,714 $44,776 $51,828 $67,253 $33,202
Ratio of expenses to average
net assets:
Expenses paid by the Fund........... 0.80%(3) 0.70%(2)0.70%(2) 0.70%(2) 0.70%(2) 0.70%(2)(3)
Expense offset arrangement.......... 0.01%(3) n/a n/a n/a n/a n/a
----- ----- ----- ----- ----- -----
Total expenses.................. 0.81%(3) 0.70% 0.70% 0.70% 0.70% 0.70%(3)
Ratio of net investment income
to average net assets............. 3.50%(3) 3.55% 3.51% 3.67% 3.32% 3.42%(3)
Portfolio turnover rate............. 7% 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 and
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 will terminate 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
(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, 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.
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.
<PAGE>
THE 59 WALL STREET TAX FREE SHORT/INTERMEDIATE FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
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 six months
ended December 31, 1997, the Fund incurred $86,673 for advisory services.
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, 1997, the Fund incurred
$52,004 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 six months ended
December 31, 1997, the Fund incurred $86,673 for shareholder servicing/eligible
institution services.
Board of Trustees' Fees. Each Trustee receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses from the Fund. For the six
months ended December 31, 1997, the Fund incurred $2,141 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 0.05% to
13.57% of investments. At December 31, 1997, the five largest holdings by state
were Texas 13.57%; Illinois 10.24%; Washington 8.51%; Arizona 8.14%; and New
Jersey 5.75%. For the six months ended December 31, 1997, the cost of purchases
and the proceeds of sales of investment securities other than short-term
investments were $26,452,495 and $4,463,207, respectively. Custody fees for the
Fund were reduced by $7,087 as a result of an offset arrangement with the Fund's
custodian.
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, 1997 June 30, 1997
----------------- ------------
Shares beneficial interest sold ............. 3,519,348 4,239,232
Shares of beneficial interest issued in
connection with reinvestment of dividends.. 49,170 79,257
Shares of beneficial interest repurchased.... (1,777,394) (3,287,198)
--------- ---------
Net increase ................................ 1,791,124 1,031,291
========= =========
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>
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.
