[Graphic Omitted]
Inflation-Indexed Securities Fund
ANNUAL REPORT
October 31, 1999
<PAGE>
THE 59 WALL STREET INFLATION-INDEXED SECURITIES FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
--------- -----------
<C> <S> <C> <C>
TENNESSEE VALLEY AUTHORITY NOTES (2.5%)
$ 316,383 3.375%, 1/15/2007 (identified cost $307,288)............................. $ 291,664
-----------
U.S. TREASURY NOTES and bonds (90.9%)
806,777 3.375%, 1/15/2007........................................................ 768,955
1,831,721 3.625%, 1/15/2008........................................................ 1,767,042
1,159,716 3.625%, 4/15/2028........................................................ 1,062,949
2,494,481 3.625%, 7/15/2002........................................................ 2,478,891
1,528,230 3.875%, 1/15/2009........................................................ 1,499,576
3,277,858 3.875%, 4/15/2029........................................................ 3,138,549
-----------
Total U.S. Treasury Notes and Bonds
(identified cost $10,817,725) ................................... 10,715,962
-----------
REPURCHASE AGREEMENTS (5.9%)
700,000 J.P. Morgan & Co., 5.10%, 11/01/99
(Agreement dated 10/29/99 collateralized by $717,000
Treasury Notes 4.5%, due 01/31/01; $700,297
to be received upon maturity ) (identified cost $700,000)............ 700,000
-----------
TOTAL INVESTMENTS (identified cost $11,825,013) (a) .......................... 99.3% 11,707,626
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............................... 0.7 81,033
----- -----------
NET ASSETS ................................................................... 100.0% $11,788,659
===== ===========
</TABLE>
- ----------
(a) The aggregate cost for federal income tax purposes is $11,918,687, the
aggregate gross unrealized appreciation is $1,570, and the aggregate gross
unrealized depreciation is $212,631, resulting in net unrealized
depreciation of $211,061.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET INFLATION-INDEXED SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Investments in securities, at value (identified cost $11,825,013) (Note 1)................ $11,707,626
Cash...................................................................................... 5,990
Interest receivable....................................................................... 82,896
-----------
Total Assets ..................................................................... 11,796,512
-----------
LIABILITIES:
Payables for:
Fund shares purchased................................................................... 1,400
Administrative fee (Note 2)............................................................. 993
Expense payment fee (Note 2)............................................................ 5,460
-----------
Total Liabilities ................................................................ 7,853
-----------
Net Assets .................................................................................. $11,788,659
-----------
Net Assets Consist of:
Paid-in capital......................................................................... $12,648,375
Accumulated net realized loss on investments............................................ (742,329)
Net unrealized depreciation............................................................. (117,387)
-----------
Net Assets .................................................................................. $11,788,659
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($11,788,659 / 1,273,104 shares).......................................................... $9.26
===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET INFLATION-INDEXED SECURITIES FUND
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................................................................ $ 719,981
---------
Expenses:
Administrative fee (Note 2)......................................................... 12,443
Expense payment fee (Note 2)........................................................ 68,473
---------
Total Expenses .................................................................. 80,916
---------
Net Investment Income ........................................................... 639,065
---------
NET REALIZED AND UNREALIZED LOSS (Notes 1 and 3):
Net realized loss on investments and foreign exchange transactions.................. (198,319)
Net change in unrealized appreciation on investments ............................... (143,850)
---------
Net Realized and Unrealized Loss ................................................ (342,169)
---------
Net Increase in Net Assets Resulting from Operations ............................... $ 296,896
=========
</TABLE>
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET INFLATION-INDEXED SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the years ended October 31,
-----------------------------------
1999 1998
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income............................................ $ 639,065 $ 553,056
Net realized gain (loss) on investments and
foreign exchange transactions................................. (198,319) 25,456
Net change in unrealized appreciation (depreciation) on
investments .................................................. (143,850) 24,847
----------- -----------
Net increase in net assets resulting from operations .......... 296,896 603,359
----------- -----------
Dividends and distributions declared (Note 1):
From net investment income....................................... (638,362) (547,932)
----------- -----------
Capital stock transactions (Note 4):
Net proceeds from sales of capital stock......................... 3,568,054 3,457,484
Net asset value of capital stock issued to shareholders in
reinvestment of dividends and distributions................... 86,968 80,808
Net cost of capital stock redeemed............................... (4,118,741) (4,743,666)
----------- -----------
Net decrease in net assets resulting from capital
stock transactions ........................................... (463,719) (1,205,374)
----------- -----------
Total decrease in net assets................................... (805,185) (1,149,947)
----------- -----------
NET ASSETS:
Beginning of year.................................................... 12,593,844 13,743,791
----------- -----------
End of year (including undistributed net investment
income of $0 and $7,336, respectively) ........................... $11,788,659 $12,593,844
=========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET INFLATION-INDEXED SECURITIES FUND
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout each year
<TABLE>
<CAPTION>
For the years ended October 31,
------------------------------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year...................... $9.52 $9.51 $9.67 $9.76 $9.37
Income from investment operations:
Net investment income................................. 0.48 0.45 0.48 0.55 0.54
Net realized and unrealized gain (loss)............... (0.26) 0.01 (0.16) (0.09) 0.39
Less dividends and distributions (Note 1):
From net investment income............................ (0.48) (0.45) (0.48) (0.55) (0.54)
----- ----- ----- ----- -----
Net asset value, end of year .......................... $9.26 $9.52 $9.51 $9.67 $9.76
===== ===== ===== ===== =====
Total Return(1)......................................... 2.43% 4.98% 3.40% 4.88% 10.26%
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)............... $11,789 $12,594 $13,744 $16,821 $10,830
Expenses as a percentage of average
net assets(1)....................................... 0.65% 0.65% 0.73% 0.85% 0.85%
Ratio of net investment income
to average net assets............................... 5.14% 4.48% 4.99% 5.73% 5.66%
Portfolio turnover rate............................... 899% 305% 372% 114% 228%
- ---------
(1) Had the expense payment agreement not been in place, the ratio of expenses
to average net assets and total return would have been as follows:
Ratio of expenses to average net assets........... 1.19% 1.15% 1.24% 1.40% 1.40%
Total return...................................... 1.89% 4.45% 2.89% 4.33% 9.71%
</TABLE>
Furthermore, the ratio of expenses to average net assets for the years
ended October 31, 1999, 1998, 1997, 1996, and 1995, reflects fees paid with
brokerage commissions and fees reduced in connection with specific
agreements. Had these arrangements not been in place, the ratio would have
been 1.20%, 1.15%, 1.26%, 1.42%, and 1.43%, respectively.
Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET INFLATION-INDEXED SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies. The 59 Wall Street
Inflation-Indexed Securities Fund (formerly The 59 Wall Street
Short/Intermediate Fixed Income Fund) (the "Fund") is a 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 Fund commenced operations on July 23, 1992.
Effective March 1, 1997, the Fund changed its name to The 59 Wall Street
Inflation-Indexed Securities Fund.
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 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.
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.
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 Board of Directors.
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. 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.
The 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
statements may differ from that reported on the 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 net investment income and 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.
<PAGE>
THE 59 WALL STREET INFLATION-INDEXED SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (continued)
D. Forward Foreign Currency Exchange Contracts. The Fund may enter
into forward foreign currency exchange contracts ("contracts") in
connection with planned purchases or sales of securities or to hedge the
U.S. dollar value of portfolio securities denominated in a particular
currency. The Fund has to hedge the U.S. dollar value of portfolio
securities denominated in a particular currency. The Fund has no specific
limitation on the percentage of assets which may be committed to these
types of contracts. The Fund could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their
contracts or if the value of the foreign currency changes unfavorably. The
U.S. dollar values of foreign currency underlying all contractual
commitments held by the funds are determined using forward currency
exchange rates supplied by a quotation service.
E. Dividends and Distributions to Shareholders. Dividends to
shareholders from net investment income are paid monthly and are recorded
on the ex-dividend date. Distributions from net capital gains, if any, are
paid annually and are recorded on the ex-dividend date.
2. Transactions with Affiliates.
Investment Advisory Fee. The Corporation 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.
Administrative Fee. The Corporation has an administration agreement with
Brown Brothers Harriman & Co. (the "Administrator") for which the Administrator
receives a fee from the Fund calculated daily and paid monthly at an annual rate
equivalent to 0.10% 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 October 31, 1999, the Fund incurred $12,443
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 the Fund calculated daily and paid monthly at an annual rate equivalent to
0.25% of the Fund's average daily net assets.
Expense Payment Fee. 59 Wall Street Administrators, Inc. pays certain
expenses of the Fund and receives a fee from the Fund, computed and paid
monthly, such that after such fee the aggregate expenses will not exceed 0.65%
of the Fund's average daily net assets. Prior to March 1, 1997, under an
agreement dated February 22, 1995, 59 Wall Street Administrators, Inc. received
a fee from the Fund such that after such payment the aggregate expenses of the
Fund did not exceed an agreed annual rate of 0.85% of the average daily net
assets of the fund. For the year ended October 31, 1999, 59 Wall Street
Administrators, Inc. incurred $136,123 in expenses, including investment
advisory fees of $31,109 and shareholder servicing/eligible institution fees of
$31,109, on behalf of the Fund. The Fund's expense payment fee agreement will
terminate on July 1, 2000.
3. Investment Transactions. For the year ended October 31, 1999, the cost
of purchases and the proceeds of sales of investment securities other than
short-term investments were $100,923,249 and $102,143,182, respectively. Custody
fees for the Fund paid pursuant to the expense payment agreement (see Note 2)
were reduced by approximately $1,740 as a result of an expense offset
arrangement with the Fund's custodian.
<PAGE>
THE 59 WALL STREET INFLATION-INDEXED SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS (continued)
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 the Fund. Transactions in shares of capital
stock were as follows:
<TABLE>
<CAPTION>
For the years ended October 31,
-------------------------------------
1999 1998
---------- ---------
<S> <C> <C>
Capital stock sold....................................... 380,212 367,554
Capital stock issued in connection with
reinvestment of dividends.............................. 9,307 8,593
Capital stock repurchased................................ (493,283) (498,991)
---------- ---------
Net decrease............................................. (103,764) (122,844)
========== =========
</TABLE>
5. Federal Income Tax Status. At October 31, 1999, the Fund for federal
income taxes purposes, has a capital loss carryforward of $648,655, which may be
applied against any net taxable realized gain of each succeeding year until the
earlier of its utilization or expiration on October 31, 2007.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
The 59 Wall Street Inflation-Indexed Securities Fund (a series of The 59 Wall
Street Fund, Inc.):
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of The 59 Wall Street Inflation-Indexed
Securities Fund (a series of The 59 Wall Street Fund, Inc.) as of October 31,
1999, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended October 31, 1999 and
1998, and the financial highlights for each of the years in the five-year period
ended October 31, 1999. 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 audited
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, 1999 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
Inflation-Indexed Securities Fund at October 31, 1999, and the results of its
operations, the changes in its net assets, and its financial highlights for
respective stated periods in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Boston, Massachusetts
December 17, 1999
<PAGE>
Management's Discussion of fund performance
The following investment management strategies and techniques have
materially affected the Fund's performance for the fiscal year ended October 31,
1999. Inflation-Indexed Securities Fund
For the year ending October 31, 1999, interest rates increased 75 to 150
basis points. The Federal Reserve raised the Fed Funds target rate twice. Fixed
income securities came under pressure because of strong economic growth, rising
inflation, and a Federal Reserve in a tightening mode. Strong economic growth,
rising commodity and oil prices and a strong housing market all caused
inflation, as measured by the CPI, to rise. Although all fixed income securities
suffered price declines inflation indexed securities out performed the broad
fixed income indices by over 3%. Rising inflation hurts nominal fixed rate
coupon bonds, but helps Treasury Inflation Protection Securities (Tips), which
benefit from rising CPI. Tips benefit because their principal increases with
CPI. Because of this, Tips were one of the best performing fixed income sectors
for the year. Tips performed as they were expected to do in a rising
inflationary environment.
For the year, the portfolio generated a positive return of 2.43%
outperforming the Salomon index that returned 1.89%. Although the return is
small, most other fixed income sectors returned a negative return over the last
12 months. The portfolio's favorable relative performance was helped both by
duration decisions and correct yield curve decisions.
We continue to be optimistic on inflation indexed securities. The
securities are currently trading at over 4% real yields. Historically, this
level has proven to be attractive.
Inflation-Indexed Securities Fund Growth of $10,000
---------------------------------------------
Total Return
---------------------------------------------
Five Years Inception
One Year Ended to 10/31/99
Ended 10/31/99 (Annualized)
10/31/99 (Annualized)
---------------------------------------------
2.43% 5.16% 4.43%
---------------------------------------------
[plot points for line chart]
SB Inflation Link
Date Inflation-Indexed Fund* 3-yr Treasury Note Securities Index
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 $10,823 $10,840
10/31/93 $10,839 $10,857
11/30/93 $10,804 $10,842
12/31/93 $10,817 $10,890
1/31/94 $10,916 $10,969
2/28/94 $10,797 $10,853
3/31/94 $10,627 $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
10/31/94 $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 $11,413 $11,620
8/31/95 $11,507 $11,699
9/30/95 $11,584 $11,762
10/31/95 $11,683 $11,889
11/30/95 $11,807 $12,026
12/31/95 $11,911 $12,143
1/31/96 $11,995 $12,253
2/29/96 $11,901 $12,149
3/31/96 $11,837 $12,098
4/30/96 $11,798 $12,064
5/31/96 $11,791 $12,067
6/30/96 $11,893 $12,176
7/31/96 $11,926 $12,213
8/31/96 $11,933 $12,239
9/30/96 $12,066 $12,387
10/31/96 $12,253 $12,575
11/29/96 $12,383 $12,699
12/31/96 $12,325 $12,652
1/31/97 $12,383 $12,708
2/28/97 $12,392 $12,718 $12,392
3/31/97 $12,259 $12,675 $12,222
4/30/97 $12,351 $12,798 $12,307
5/30/97 $12,384 $12,890 $12,372
6/30/97 $12,372 $13,000 $12,333
7/31/97 $12,498 $13,208 $12,448
8/31/97 $12,506 $13,183 $12,487
9/30/97 $12,527 $13,328 $12,511
10/31/97 $12,670 $13,448 $12,647
11/30/97 $12,723 $13,473 $12,714
12/31/97 $12,607 $13,581 $12,656
1/31/98 $12,701 $13,764 $12,720
2/28/98 $12,701 $13,739 $12,709
3/31/98 $12,711 $13,786 $12,702
4/30/98 $12,840 $13,841 $12,747
5/31/98 $12,888 $13,922 $12,830
6/30/98 $12,943 $13,998 $12,866
7/31/98 $12,986 $14,072 $12,926
8/31/98 $13,017 $14,397 $12,948
9/30/98 $13,259 $14,616 $13,226
10/31/98 $13,301 $14,670 $13,249
11/30/98 $13,262 $14,620 $13,241
12/31/98 $13,196 $14,637 $13,153
01/31/99 $13,373 $14,719 $13,311
02/28/99 $13,256 $14,525 $13,218
03/31/99 $13,290 $14,636 $13,224
04/30/99 $13,381 $14,680 $13,298
05/31/99 $13,467 $14,602 $13,401
06/30/99 $13,495 $14,653 $13,399
07/31/99 $13,510 $14,679 $13,398
08/31/99 $13,521 $14,712 $13,424
09/30/99 $13,580 $14,814 $13,471
10/31/99 $13,624 $14,833 $13,499
* net of fees and expenses
** The Salomon Brothers Inflation Linked Securities Index started 2/28/97.
Therefore, for performance purposes the starting point used is the same
amount as the Fund.
Past performance is not predictive of future performance.
<PAGE>
The 59 Wall Street Fund, Inc.
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
Funds. Such offering is made only by prospectus, which includes details as to
offering price and other material information.
