U.S. Equity Fund
Short/Intermediate Fixed
Income Fund
ANNUAL REPORT
October 31, 1995
<PAGE>
THE 59 WALL STREET U.S. EQUITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
Shares Value
------ ---------
COMMON STOCKS (99.6%)
AEROSPACE/DEFENSE (1.8%)
8,800 Boeing Co. ............................................. $ 577,500
---------
AIRLINES (2.8%)
17,000 Valujet, Inc. .......................................... 884,000
---------
AUTO & TRUCK MANUFACTURERS (1.6%)
12,000 General Motors Corp. ................................... 525,000
---------
BANKING (1.5%)
7,500 SunTrust Banks, Inc. ................................... 483,750
---------
CHEMICALS (1.9%)
8,500 FMC Corp.* ............................................. 608,812
---------
COMPUTER RELATED (4.5%)
7,000 International Business
Machines Corp. ......................................... 680,750
24,000 Stratus Computer, Inc.* ................................ 747,000
---------
1,427,750
---------
COMPUTER SOFTWARE (8.6%)
16,500 Bay Networks, Inc.* ..................................... 1,095,187
28,500 Cadence Design Systems, Inc.* ........................... 919,125
13,500 Computer Associates
International, Inc. .................................... 742,500
---------
2,756,812
---------
COSMETICS & TOILETRIES (3.5%)
8,500 Avon Products, Inc. .................................... 604,562
7,500 Colgate-Palmolive Co. .................................. 519,375
---------
1,123,937
---------
DIVERSIFIED (3.4%)
10,000 Minnesota Mining &
Manufacturing Co. ...................................... 568,750
11,500 Tenneco, Inc. .......................................... 504,563
---------
1,073,313
---------
ELECTRICAL EQUIPMENT (2.1%)
10,500 General Electric Co. ................................... 664,125
---------
ELECTRONICS (1.7%)
6,000 Hewlett-Packard Co. .................................... 555,750
---------
EXPLORATION/DRILLING (1.9%)
24,000 Noble Affiliates, Inc. ................................. 594,000
---------
FINANCIAL SERVICES (3.5%)
6,000 Federal National Mortgage Assoc ........................ 629,250
10,000 PMI Group, Inc. (The) .................................. 480,000
---------
1,109,250
---------
FOOD & BEVERAGES (3.5%)
11,500 Campbell Soup Co. ...................................... 602,312
10,000 PepsiCo, Inc. .......................................... 527,500
---------
1,129,812
---------
INSURANCE (4.0%)
7,500 American International
Group, Inc. ............................................ 632,812
32,000 Prudential Reinsurance
Hldgs., Inc. ........................................... 652,000
---------
1,284,812
---------
MACHINERY/EQUIPMENT (3.6%)
13,500 Ingersoll-Rand Co. ..................................... 477,563
11,000 Sundstrand Corp. ....................................... 673,750
---------
1,151,313
---------
MEDIA (1.4%)
26,000 Tele-Communications, Inc. --
Class A* ............................................... 443,625
---------
MEDICAL SUPPLIES & SERVICES (7.3%)
10,625 Guidant Corp. .......................................... 340,000
11,000 Medtronic, Inc. ........................................ 635,250
10,500 PacifiCare Health Systems, Inc.* ....................... 765,188
11,500 St. Jude Medical, Inc.* ................................ 611,656
---------
2,352,094
---------
METALS & MINING (3.2%)
30,000 Allegheny Ludlum Corp. ................................. 506,250
10,000 Aluminum Company of America ............................ 510,000
---------
1,016,250
---------
OIL (5.1%)
9,000 Amoco Corp. ............................................ 574,875
6,300 Mobil Corp. ............................................ 634,725
3,400 Royal Dutch Petroleum Co. .............................. 417,775
---------
1,627,375
---------
<PAGE>
THE 59 WALL STREET U.S. EQUITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995 (continued)
Shares Value
------ ---------
PAPER/FOREST PRODUCTS (1.8%)
10,000 Consolidated Papers, Inc. .............................. $ 572,500
---------
PHARMACEUTICALS (3.2%)
8,000 Bristol-Myers Squibb Co. ............................... 610,000
4,315 Lilly (Eli) & Co. ...................................... 416,937
---------
1,026,937
---------
PHOTO & OPTICAL (2.1%)
10,500 Eastman Kodak Co. ...................................... 657,563
---------
PRINTING/PUBLISHING (1.2%)
11,000 Donnelley (R. R.) & Sons Co. ........................... 401,500
---------
PROFESSIONAL SERVICES (2.3%)
18,000 H&R Block, Inc. ........................................ 742,500
---------
RAILROADS (1.7%)
8,500 Union Pacific Corp. .................................... 555,688
---------
REAL ESTATE (3.2%)
9,000 Developers Diversified
Realty Corp. ........................................... 256,500
30,000 Security Capital Pacific Trust ......................... 536,250
16,000 United Dominion Realty Trust ........................... 220,000
---------
1,012,750
---------
RECREATION (3.4%)
11,000 Disney (Walt) Co. ...................................... 633,875
16,000 Mattel, Inc. ........................................... 460,000
---------
1,093,875
---------
RESTAURANT/LODGING (1.8%)
16,000 Marriott International, Inc. ........................... 590,000
---------
RETAIL (2.5%)
30,000 Price/Costco, Inc.* .................................... 511,875
13,000 Wal-Mart Stores, Inc. .................................. 281,125
---------
793,000
---------
TOBACCO (3.4%)
9,000 Philip Morris Co., Inc. ................................ 760,500
10,500 UST, Inc. .............................................. 315,000
---------
1,075,500
---------
UTILITIES (6.1%)
8,000 AT&T Corp. ............................................. 512,000
13,000 CINergy Corp. .......................................... 368,875
15,000 General Public Utilities Corp........................... 468,750
28,000 MCN Corp. .............................................. 609,000
---------
1,958,625
TOTAL INVESTMENTS (identified cost $25,688,633) (a) .... 99.6% $31,869,718
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ......... 0.4 129,965
----- -----------
NET ASSETS ............................................. 100.0% $31,999,683
===== ===========
- ---------
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $25,714,194, the
aggregate gross unrealized appreciation is $6,489,469 and the aggregate
gross unrealized depreciation is $333,945, resulting in net unrealized
appreciation of $6,155,524.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET U.S. EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
ASSETS:
Investments in securities, at value
(identified cost $25,688,633) (Note 1) .................. $31,869,718
Cash ...................................................... 305,649
Receivables for:
Investments sold ........................................ 739,325
Dividends ............................................... 37,785
Capital stock sold ...................................... 19,711
Deferred organization expenses (Note 1) ................... 7,740
-----------
Total Assets ........................................ 32,979,928
-----------
LIABILITIES:
Payables for:
Investments purchased ................................... 898,100
Capital stock redeemed .................................. 50,789
Expense payment fee (Note 2) ............................ 27,389
Administrative fee (Note 2) ............................. 3,967
-----------
Total Liabilities ................................... 980,245
-----------
NET ASSETS ................................................... $31,999,683
===========
Net Assets Consist of:
Paid-in capital ........................................... $25,001,032
Accumulated undistributed net investment income ........... 61,602
Accumulated net realized gain ............................. 755,964
Net unrealized appreciation ............................... 6,181,085
-----------
Net Assets ................................................... $31,999,683
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($31,999,683 / 877,598 shares) ......................... $ 36.46
===========
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET U.S. EQUITY FUND
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding tax of $3,959) .... $ 525,152
-----------
Expenses:
Expense payment fee (Note 2) ............................ 265,849
Administrative fee (Note 2) ............................. 38,617
Amortization of organization expenses (Note 1) .......... 4,468
-----------
Total Expenses ...................................... 308,934
-----------
Net Investment Income ............................... 216,218
-----------
NET REALIZED AND UNREALIZED GAIN (Notes 1 and 3):
Net realized gain on investments ........................ 667,354
Net change in unrealized appreciation on investments .... 5,189,897
-----------
Net Realized and Unrealized Gain ...................... 5,857,251
-----------
Net Increase in Net Assets Resulting from Operations .... $ 6,073,469
===========
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET U.S. EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the years ended October 31,
------------------------------
1995 1994
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income .................................... $ 216,218 $ 174,825
Net realized gain on investments ......................... 667,354 473,695
Net change in unrealized appreciation on investments ..... 5,189,897 217,087
------------ ------------
Net increase in net assets resulting from operations . 6,073,469 865,607
------------ ------------
Dividends and distributions declared from (Note 1):
Net investment income .................................... (223,291) (106,883)
Net realized gains ....................................... (377,049) (43,075)
------------ ------------
Total dividends and distributions declared ........... (600,340) (149,958)
------------ ------------
Capital stock transactions (Note 4):
Net proceeds from sales of capital stock ................. 9,618,272 11,015,245
Net asset value of capital stock issued to shareholders
in reinvestment of dividends and distributions ........ 393,829 85,809
Net cost of capital stock redeemed ....................... (5,609,953) (683,815)
------------ ------------
Net increase in net assets resulting from capital
stock transactions .................................. 4,402,148 10,417,239
------------ ------------
Total increase in net assets ....................... 9,875,277 11,132,888
NET ASSETS:
Beginning of year .......................................... 22,124,406 10,991,518
------------ ------------
End of year (including undistributed net investment income
of $61,602 and $68,675, respectively) ................. $ 31,999,683 $ 22,124,406
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET U.S. EQUITY FUND
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share
outstanding throughout each period
<TABLE>
<CAPTION>
For the period
July 23, 1992
For the years ended October 31, (commencement of
------------------------------------- operations) to
1995 1994 1993 October 31, 1992
------- ------- ------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............... $ 29.84 $ 28.80 $ 25.77 $ 25.00
Income from investment operations:
Net investment income ............................ 0.26 0.26 0.28 0.07
Net realized and unrealized gain ................. 7.15 1.05 3.04 0.76
Less dividends and distributions (Note 1):
From net investment income ....................... (0.28) (0.17) (0.29) (0.06)
From net realized gains .......................... (0.51) (0.10) -- --
------- ------- ------- -------
Net asset value, end of period ..................... $ 36.46 $ 29.84 $ 28.80 $ 25.77
======= ======= ======= =======
Cumulative investment return** ..................... 25.50% 4.61% 12.91% 3.32%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) ........ $32,000 $22,124 $10,992 $ 2,378
Ratio of expenses to average net assets (Note 2)** 1.20% 1.20% 1.20% 1.20%*
Ratio of net investment income to average
net assets ..................................... 0.84% 1.06% 1.07% 1.20%*
Portfolio turnover rate .......................... 69% 61% 52% 2%
Average commission rate paid per share ........... $0.08 -- -- --
</TABLE>
- ----------
* Annualized.
** Had the expense payment agreement not been in place, the ratio of expenses
to average net assets for the years ended October 31, 1995, 1994 and 1993
and for the period ended October 31, 1992 would have been 1.28%, 1.46%,
2.09% and 5.58%, respectively. For the same periods, the cumulative return
of the Fund would have been 25.42%, 4.35%, 12.02% and (1.06)%,
respectively. Furthermore, the ratio of expenses to average net assets for
the year ended October 31, 1995 reflects fees paid with brokerage
commissions and fees reduced in connection with specific agreements. Had
these arrangements not been in place, this ratio would have been 1.38%.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995
Principal
Amount Value
---------- ----------
U.S. TREASURY NOTES (63.2%)
$ 300,000 5.50%, 2/28/99 ......................................... $ 297,936
1,460,000 5.875%, 3/31/99 ........................................ 1,465,475
4,030,000 6.75%, 5/31/99 ......................................... 4,155,937
885,000 8.50%, 7/15/97 ......................................... 925,790
----------
Total U.S. Treasury Notes (identified cost $6,744,364). $6,845,138
----------
CORPORATE NOTES AND BONDS (12.7%)
AUTOMOTIVE (2.8%)
$ 300,000 Ford Motor Credit Co., 9.125%, 12/15/95 ................ $ 301,008
---------
BANKING (3.4%)
Citicorp
140,000 7.75%, 6/15/2006 ....................................... 150,237
200,000 8.00%, 2/1/2003 ........................................ 215,130
----------
365,367
----------
BEVERAGES (2.4%)
250,000 PepsiCo, Inc., 6.80%, 5/15/2000 ........................ 255,150
----------
UTILITIES (4.1%)
Southwestern Bell Telephone Co.
250,000 6.25%, 10/15/2002 ...................................... 249,610
200,000 6.375%, 4/1/2001 ....................................... 199,006
----------
448,616
----------
Total Corporate Notes and Bonds
(identified cost $1,379,438)......................... $1,370,141
----------
<PAGE>
THE 59 WALL STREET SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1995 (continued)
Principal
Amount Value
---------- ----------
FEDERAL HOME LOAN MORTGAGE CORPORATION (5.9%)
$ 330,114 7.00%, 12/1/2007 ....................................... $ 332,794
200,000 7.25%, 1/15/2017 ....................................... 205,186
100,000 7.90%, 4/27/2005 ....................................... 103,422
---------
Total Federal Home Loan Mortgage Corporation
(identified cost $611,142) .......................... $ 641,402
---------
$ 187,256 FEDERAL NATIONAL MORTGAGE ASSOCIATION (1.7%)
Real Estate Mortgage Investment Conduit
6.50%, 4/25/2010 (identified cost $189,421)............. $ 186,846
----------
$1,500,000 REPURCHASE AGREEMENTS (13.9%)
Salomon Brothers, Inc., 5.85%, 11/1/95
(Agreement dated 10/31/95 collateralized by $1,462,000
U.S. Treasury Notes, 7.875%, due 4/15/98; $1,500,244
to be received upon maturity) (identified cost
$1,500,000)....................................... $1,500,000
----------
TOTAL INVESTMENTS (identified cost $10,424,365)(a) .. 97.4% $10,543,527
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ...... 2.6 286,479
----- -----------
NET ASSETS .......................................... 100.0% $10,830,006
===== ===========
- ----------
(a) The aggregate cost for federal income tax purposes is $10,424,365, the
aggregate gross unrealized appreciation is $150,869 and the aggregate gross
unrealized depreciation is $31,707, resulting in net unrealized
appreciation of $119,162.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET SHORT/INTERMEDIATE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments* in securities, at value (identified cost $10,424,365) (Note 1)............ $10,543,527
Cash................................................................................... 98,384
Receivables for:
Interest............................................................................. 179,708
Capital stock sold................................................................... 7,630
Deferred organization expenses (Note 1)................................................ 7,689
-----------
Total Assets .................................................................. 10,836,938
-----------
LIABILITIES:
Payables for:
Expense payment fee (Note 2)......................................................... 5,642
Administrative fee (Note 2).......................................................... 1,290
-----------
Total Liabilities ............................................................... 6,932
-----------
NET ASSETS .................................................................................. $10,830,006
===========
Net Assets Consist of:
Paid-in capital........................................................................ $11,144,066
Accumulated net realized loss.......................................................... (433,222)
Net unrealized appreciation............................................................ 119,162
-----------
Net Assets .................................................................................. $10,830,006
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($10,830,006 / 1,109,810 shares) ....................................................... $ 9.76
======
</TABLE>
- -----------------
* Including repurchase agreement of $1,500,000.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET SHORT/INTERMEDIATE FIXED INCOME FUND
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
INVESTMENT INCOME:
Income:
Interest.................................................... $ 653,866
---------
Expenses:
Expense payment fee (Note 2)................................ 65,894
Administrative fee (Note 2)................................. 15,071
Amortization of organization expenses (Note 1).............. 4,438
--------
Total Expenses ........................................... 85,403
--------
Net Investment Income .................................... 568,463
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) (Notes 1 and 3):
Net realized loss on investments............................... (246,469)
Net change in unrealized depreciation on investments........... 661,339
--------
Net Realized and Unrealized Gain .......................... 414,870
--------
Net Increase in Net Assets Resulting from Operations .......... $983,333
========
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET SHORT/INTERMEDIATE FIXED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the years ended October 31,
---------------------------------
1995 1994
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 568,463 $ 531,286
Net realized loss on investments........................ (246,469) (175,242)
Net change in unrealized depreciation/appreciation
on investments......................................... 661,339 (592,970)
----------- -----------
Net increase (decrease) in net assets resulting
from operations .................................... 983,333 (236,926)
----------- -----------
Dividends and distributions declared (Note 1):
From net investment income.............................. (568,662) (531,546)
From net realized gains................................. -- (49,267)
In excess of net realized gains ........................ -- (11,312)
----------- -----------
Total dividends and distributions declared............ (568,662) (592,125)
----------- -----------
Capital stock transactions (Note 4):
Net proceeds from sales of capital stock................ 5,781,933 6,700,547
Net asset value of capital stock issued to shareholders
in reinvestment of dividends and distributions ........ 277,410 285,615
Net cost of capital stock redeemed...................... (5,971,534) (5,558,868)
----------- -----------
Net increase in net assets resulting from capital
stock transactions ................................ 87,809 1,427,294
----------- -----------
Total increase in net assets...................... 502,480 598,243
NET ASSETS:
Beginning of year............................................. 10,327,526 9,729,283
----------- -----------
End of year ................................................. $10,830,006 $10,327,526
=========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET 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
July 23, 1992
For the years ended October 31, (commencement of
------------------------------------- operations) to
1995 1994 1993 October 31, 1992
-------- -------- ------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period...................... $ 9.37 $ 10.17 $ 9.93 $ 10.00
Income from investment operations:
Net investment income................................... 0.54 0.52 0.50 0.14
Net realized and unrealized gain (loss) ................ 0.39 (0.74) 0.26 (0.09)
Less dividends and distributions (Note 1):
From net investment income.............................. (0.54) (0.52) (0.52) (0.12)
From net realized gains................................. -- (0.05) -- --
In excess of net realized gains......................... -- (0.01) -- --
------- ------ ------- ------
Net asset value, end of period............................ $ 9.76 $ 9.37 $ 10.17 $ 9.93
======= ====== ======= ======
Cumulative investment return**............................ 10.26% (2.23)% 7.85% 0.49%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted)............... $10,830 $10,328 $ 9,729 $ 1,648
Ratio of expenses to average net assets (Note 2)**...... 0.85% 0.85% 0.85% 0.85%*
Ratio of net investment income to average
net assets........................................... 5.66% 5.29% 5.32% 6.23%*
Portfolio turnover rate................................. 228% 129% 149% 207%
</TABLE>
- ------------
* Annualized.
** Had the expense payment agreement not been in place, the ratio of expenses to
average net assets for the years ended October 31, 1995, 1994 and 1993 and
for the period ended October 31, 1992 would have been 1.40%, 1.46%, 1.46% and
6.99%, respectively. For the same periods, the cumulative return of the Fund
would have been 9.71%, (2.84)%, 7.24% and (5.65)%, respectively. Furthermore,
the ratio of expenses to average net assets for the year ended October 31,
1995 reflects fees reduced in connection with specific agreements. Had these
arrangements not been in place, this ratio would have been 1.43%.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET U.S. EQUITY FUND
THE 59 WALL STREET SHORT/INTERMEDIATE FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies. The 59 Wall Street
U.S. Equity Fund and The 59 Wall Street Short/Intermediate Fixed Income Fund
(individually the "Fund" or collectively the "Funds") are separate diversified
series of The 59 Wall Street Fund, Inc. (the "Corporation") which is registered
under the Investment Company Act of 1940, as amended. The Corporation is an
open-end management investment company organized under the laws of the State of
Maryland on July 16, 1990. The Funds commenced operations on July 23, 1992.
The following is a summary of significant accounting policies for each
Fund.
A. Valuation of Investments. (1) The value of investments listed on
a securities exchange is based on the last sale price on that exchange
prior to the time when assets are valued, or in the absence of recorded
sales, at the average of readily available closing bid and asked prices on
such exchange; (2) unlisted securities are valued at the average of the
quoted bid and asked prices in the over-the-counter market; (3) 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
Directors. 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; (4) 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 Corporation's Board of Directors.
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; (5) 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 a Fund was more than
60 days, unless this is determined not to represent fair value by the
Board of Directors.
B. Accounting for Investments. Security transactions are accounted
for on the trade date. Realized gains and losses on security transactions
are determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend
date except that, if the ex-dividend date has passed, certain dividends
from foreign securities are recorded as soon as a Fund is informed of the
ex-dividend date. Dividend income is recorded net of foreign taxes
withheld where recovery of such taxes is not assured. Interest income is
accrued daily.
C. Deferred Organization Expenses. Expenses incurred by each Fund in
connection with its organization and initial public offering of its shares
are being amortized by each Fund on a straight-line basis over a five-year
period.
D. Federal Income Taxes. It is the Corporation's policy to comply
with the requirements of the Internal Revenue 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.
Each Fund files a tax return annually using tax accounting methods
required under provisions of the Internal Revenue Code which may differ
from generally accepted accounting principles, the basis on which these
financial statements are prepared. Accordingly, the amount of net
investment income and net realized gain reported on these financial
<PAGE>
THE 59 WALL STREET U.S. EQUITY FUND
THE 59 WALL STREET SHORT/INTERMEDIATE FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (continued)
statements may differ from that reported on each Fund's tax return due to
certain book-to-tax timing differences such as losses deferred due to
"wash sale" transactions and utilization of capital loss carryforwards.
These timing differences may result in temporary over-distributions for
financial statement purposes and are classified as distributions in excess
of accumulated net realized gains. As such, the character of distributions
to shareholders reported in the Financial Highlights table may differ from
that reported to shareholders on Form 1099-DIV. These distributions do not
constitute a return of capital.
E. Dividends and Distributions to Shareholders. Dividends and
distributions to shareholders are recorded on the ex-dividend date.
2. Transactions with Affiliates.
Investment Advisory Agreement. The Corporation has an investment advisory
agreement with Brown Brothers Harriman & Co. (the "Adviser") for which the
Adviser receives a fee from each Fund calculated daily and paid monthly at an
annual rate equivalent to 0.65% and 0.40% of the average daily net assets for
the U.S. Equity Fund and the Short/Intermediate Fixed Income Fund, respectively.
Administrative Fee. The Corporation has an administration agreement with
Brown Brothers Harriman & Co. (the "Administrator") for which the Administrator
receives a fee from each Fund calculated daily and paid monthly at an annual
rate equivalent to 0.15% of each 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 October 31, 1995, the U.S.
Equity Fund and the Short/Intermediate Fixed Income Fund incurred $38,617 and
$15,071, respectively, for administrative services.
Shareholder Servicing/Eligible Institution Agreement. The Corporation 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 each Fund calculated daily and paid monthly at an annual rate
equivalent to 0.25% of each Fund's average daily net assets.
Expense Payment Fee. 59 Wall Street Administrators, Inc. pays certain
expenses of each Fund and receives a fee from each Fund, computed and paid
monthly, such that after such fee the aggregate expenses will not exceed 1.20%
and 0.85% of the average daily net assets for the U.S. Equity Fund and the
Short/Intermediate Fixed Income Fund, respectively. For the year ended October
31, 1995, 59 Wall Street Administrators, Inc. incurred $290,885 and $125,150 in
expenses, including investment advisory fees of $167,339 and $40,190 and
shareholder servicing/eligible institution fees of $64,361 and $25,119, on
behalf of the U.S. Equity Fund and the Short/Intermediate Fixed Income Fund,
respectively. The expense payment fee agreement of each Fund will terminate on
July 1, 1997.
<PAGE>
THE 59 WALL STREET U.S. EQUITY FUND
THE 59 WALL STREET SHORT/INTERMEDIATE FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS (continued)
3. Investment Transactions. For the year ended October 31, 1995, the cost
of purchases and the proceeds of sales of investment securities other than
short-term investments were as follows:
U.S. Equity Short/Intermediate
Fund Fixed Income Fund
----------- ------------------
Purchases................................ $21,807,548 $21,505,598
Sales.................................... 17,768,619 22,488,396
For the year ended October 31, 1995, the U.S. Equity Fund paid brokerage
commissions of $35,145 to Brown Brothers Harriman & Co. for transactions
executed on its behalf. Custody fees for the U.S. Equity Fund paid pursuant to
the expense payment agreement (see Note 2) were reduced by $14,000 as a result
of the U.S. Equity Fund directing a portion of its portfolio transactions to
certain brokers. Additionally, custody fees for the U.S. Equity Fund and
Short/Intermediate Fixed Income Fund paid pursuant to the expense payment
agreement were reduced by $11,463 and $2,673, respectively, as a result of an
expense offset arrangement with the Funds' custodian.
4. Capital Stock. The Corporation is permitted to issue 2,500,000,000
shares of capital stock, par value $.001 per share, of which 25,000,000 shares
have been classified as shares of each of the Funds. Transactions in shares of
capital stock were as follows:
<TABLE>
<CAPTION>
For the years ended October 31,
------------------------------------------------------------
Short/Intermediate
U. S. Equity Fund Fixed Income Fund
------------------------- --------------------------
1995 1994 1995 1994
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Capital stock sold.......................... 300,861 380,837 604,528 680,341
Capital stock issued in connection with
reinvestment of dividends................ 13,641 3,007 29,043 29,468
Capital stock repurchased................... (178,354) (24,008) (625,878) (564,403)
------- ------- ------- -------
Net increase................................ 136,148 359,836 7,693 145,406
======= ======= ======= =======
</TABLE>
5. Federal Income Tax Status. At October 31, 1995 the Short/Intermediate
Fixed Income Fund had net capital loss carryovers of approximately $186,500,
available through October 31, 2002 and $249,000 available through October 21,
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 distibutions may be taxable to shareholders as
ordinary income.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
The 59 Wall Street Fund, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of The 59 Wall Street U. S. Equity Fund
and The 59 Wall Street Short/Intermediate Fixed Income Fund (portfolios of The
59 Wall Street Fund, Inc.) as of October 31, 1995, the related statements of
operations for the year then ended, the statements of changes in net assets for
the years ended October 31, 1995 and 1994, and the financial highlights for each
of the years in the four year period ended October 31, 1995. 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 October
31, 1995 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. 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 each of the
respective portfolios of The 59 Wall Street Fund, Inc. at October 31, 1995, the
results of their operations, the changes in their net assets, and their
financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
December 12, 1995
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The following investment management strategies and techniques have
materially affected the Funds' performance for the fiscal year ended October
31, 1995.
U.S. EQUITY FUND
The U.S. Equity Fund surged 25.5% for the twelve months ended October 31,
1995. Over the same period, the Standard and Poor|s 500 Index returned 26.4%.
The Fund benefited from good stock selection in the healthcare and
technology sectors. However, poor stock selection and an underweighting of
financial stocks led to the small negative variance relative to the S&P 500
benchmark.
[The following table was represented by a chart in the printed matter]
U.S. Equity Fund Growth of $10,000
Line graph with two axes: the X-axis represents years of operations; the Y-axis
represents dollar value. The graph plots two lines: the first line represents
the growth of a ten thousand dollar investment in the Fund from July 23, 1992 to
October 31, 1995; the second line represents the growth of a ten thousand dollar
investment in a portfolio of securities reflecting the composition of the
Standard & Poor's 500 Index for the same time period. The graph points are as
follows:
Year Fund* S&P 500 Index
---- ----- -------------
7/23/92 $10,000 $10,000
7/31/92 10,320 10,328
8/31/92 10,076 10,105
9/30/92 10,284 10,236
10/31/92 10,336 10,271
11/30/92 10,837 10,620
12/31/92 10,747 10,750
1/31/93 10,872 10,840
2/28/93 10,892 10,988
3/31/93 11,055 11,220
4/30/93 10,615 10,948
5/31/93 10,890 11,241
6/30/93 10,974 11,273
7/31/93 10,893 11,228
8/31/93 11,374 11,653
9/30/93 11,326 11,564
10/31/93 11,670 11,803
11/30/93 11,638 11,690
12/31/93 11,859 11,832
1/31/94 12,042 12,233
2/28/94 11,802 11,902
3/31/94 11,297 11,384
4/30/94 11,382 11,530
5/31/94 11,614 11,718
6/30/94 11,496 11,431
7/31/94 11,844 11,806
8/31/94 12,294 12,289
9/30/94 12,109 11,989
10/30/94 12,208 12,258
11/30/94 11,745 11,812
12/31/94 11,939 11,987
1/31/95 11,977 12,298
2/28/95 12,441 12,777
3/31/95 13,044 13,153
4/30/95 13,332 13,540
5/31/95 13,667 14,080
6/30/95 14,039 14,407
7/31/95 14,581 14,884
8/31/95 14,590 14,921
9/30/95 15,044 15,551
10/31/95 15,321 15,493
* net of fees and expenses
Past performance is not predictive of future performance.
<PAGE>
Short/Intermediate Fixed Income Fund
For the year ended October 31, 1995, interest rates declined dramatically
across the yield curve in response to slower economic growth, subdued inflation
and prospects for a balanced budget agreement. The strong rally in the bond
market occurred despite an inactive Federal Reserve. During this period the Fed
lowered rates by only twenty-five basis points.
For most of the year the Fund had an average maturity of 3.3 years, 0.7
years shorter than the maximum four years permitted. In July, however, the
Fund's average maturity was reduced to 2.7 years in response to strong economic
data. After yields increased by approximately 40 basis points the Fund's
average maturity was increased to 3.0 years in August. The Fund's maturity
distribution of short and long term securities enhanced returns as the yield
curve flattened.
The majority of the securities held by the Fund were U.S. government
securities. The Fund also contained corporate and mortgage-backed securities.
The Fund's corporate allocation added to performance as it was the best
performing sector. Mortgages, however, underperformed both governments and
corporates.
[The following table was represented by a chart in the printed matter]
Short/Intermediate Fixed Income Fund
Growth of $10,000
Line graph with two axes: the X-axis represents years of operations; the Y-axis
represents dollar value. The graph plots two lines: the first line represents
the growth of a ten thousand dollar investment in the Fund from July 23, 1992 to
October 31, 1995; the second line represents the growth of a ten thousand dollar
investment in a portfolio of securities reflecting the composition of the 3 Year
U.S. Treasury Note for the same time period. The graph points are as follows:
Year Fund* 3 Year T-Note
---- ----- -------------
7/23/92 $10,000 $10,000
7/31/92 9,970 9,972
8/31/92 10,060 10,095
9/30/92 10,191 10,216
10/31/92 10,049 10,114
11/30/92 9,989 10,066
12/31/92 10,109 10,186
1/31/93 10,313 10,347
2/28/93 10,467 10,478
3/31/93 10,485 10,518
4/30/93 10,568 10,598
5/31/93 10,526 10,547
6/30/93 10,650 10,664
7/31/93 10,671 10,682
8/31/93 10,791 10,805
9/30/93 10,822 10,840
10/31/93 10,838 10,857
11/30/93 10,804 10,842
12/31/93 10,816 10,890
1/31/94 10,916 10,969
2/28/94 10,796 10,853
3/31/94 10,626 10,733
4/30/94 10,533 10,654
5/31/94 10,538 10,659
6/30/94 10,539 10,674
7/31/94 10,667 10,788
8/31/94 10,691 10,822
9/30/94 10,605 10,741
10/30/94 10,596 10,767
11/30/94 10,531 10,694
12/31/94 10,561 10,717
1/31/95 10,714 10,902
2/28/95 10,899 11,089
3/31/95 10,952 11,150
4/30/95 11,072 11,269
5/31/95 11,348 11,547
6/30/95 11,412 11,603
7/31/95 11,412 11,620
8/31/95 11,507 11,699
9/30/95 11,584 11,762
10/31/95 11,683 11,889
* net of fees and expenses
Past performance is not predictive of future performance.
<PAGE>
The 59 Wall Street Fund, Inc.
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
(212) 493-8100
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
Funds. Such offering is made only by prospectus, which includes details as to
offering price and other material information.
