[Graphic Omitted]
Tax-Efficient Equity Fund
ANNUAL REPORT
October 31, 1999
<PAGE>
THE 59 WALL STREET TAX-EFFICiENT EQUITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 1999
Shares Value
------- ----------
COMMON STOCKS (97.5%)
BASIC MATERIALS (2.9%)
13,425 Monsanto Co................. $ 516,863
8,500 DuPont E.I. DeNemours & Co... 547,719
----------
1,064,582
----------
CAPITAL GOODS/DURABLES (9.6%)
12,500 Deere & Co................... 453,125
12,614 General Electric Co.......... 1,709,985
9,000 Illinois Tool Works, Inc..... 659,250
8,550 Lear Corp.*.................. 288,563
6,500 United Technologies Corp..... 393,250
----------
3,504,173
----------
CONSUMER NON-DURABLES (6.2%)
13,000 Avon Products, Inc........... 419,250
7,000 Coca Cola Co................. 413,000
12,000 Estee Lauder Companies, Inc.. 559,500
8,405 Procter & Gamble Co.......... 881,474
----------
2,273,224
----------
ENERGY (6.3%)
4,710 BP Amoco ADR................. 272,002
20,982 Royal Dutch Petroleum Co..... 1,257,609
20,012 Williams Companies, Inc...... 750,450
----------
2,280,061
----------
FINANCE (12.2%)
5,000 American Express Co.......... 770,000
14,916 American International Group. 1,535,416
10,200 Bank of New York Co, Inc..... 427,125
10,234 Citigroup, Inc............... 553,915
6,900 Merrill Lynch & Co. Inc...... 541,650
8,713 SunTrust Banks, Inc.......... 637,683
----------
4,465,789
----------
HEALTH (10.7%)
15,864 Bristol Myers Squibb Co...... 1,218,553
19,336 Guidant Corp................. 954,715
11,746 Lilly (Eli) & Co............. 809,006
26,814 Medtronic, Inc............... 928,435
----------
3,910,709
----------
RETAIL (6.8%)
10,200 CVS Corp..................... 443,062
17,437 Dayton Hudson Corp........... 1,126,866
8,000 Home Depot, Inc.............. 604,000
4,000 Kohls Corp.*................. 299,250
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2,473,178
----------
SERVICES (13.3%)
4,000 DST Systems, Inc.*........... 254,750
14,500 New York Times Co. (Class A). 583,625
13,430 CBS Corp..................... 655,552
12,676 Carnival Corp................ 564,082
18,348 Cox Communications, Inc...... 833,687
28,062 Qwest Communications
International, Inc......... 1,009,355
13,401 Time Warner, Inc............. 933,882
----------
4,834,933
----------
TECHNOLOGY (25.1%)
13,992 Automatic Data Processing, Inc. 674,239
18,134 Cadence Design Systems, Inc.* 275,410
20,864 Cisco Systems, Inc........... 1,544,588
12,000 Dell Computer Corp........... 481,125
12,288 EMC Corp..................... 897,024
8,572 Hewlett-Packard Co........... 634,864
8,340 International Business
Machines Corp.............. 820,448
10,000 Lucent Technologies, Inc..... 642,500
8,000 Microsoft Corp............... 740,500
11,738 Sun Microsystems, Inc........ 1,241,660
11,706 PE Biosystem Group Corp...... 759,427
5,000 Texas Instruments, Inc....... 448,750
----------
9,160,535
----------
UTILITIES (4.4%)
10,000 DTE Energy Co................ 331,875
10,725 GTE Corp..................... 804,375
12,000 DQE, Inc..................... 479,250
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1,615,500
----------
TOTAL INVESTMENTS
(identified cost $29,292,875)(a) ..................... 97.5% $35,582,684
CASH AND OTHER ASSETS in excess of LIABILITIES ....... 2.5 915,126
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NET ASSETS ........................................... 100.0% $36,497,810
===== ===========
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* Non-income producing security.
(a) The aggregate cost for federal income tax purpose is $29,292,875, the
aggregate gross unrealized appreciation is $7,100,311, and the aggregate
gross unrealized depreciation is $810,502, the net unrealized appreciation
of $6,289,809.
See Notes to Financial Statements.
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THE 59 WALL STREET TAX-EFFICIENT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
ASSETS:
Investments in securities, at value
(identified cost $29,292,875) (Note 1)..................... $35,582,684
Cash......................................................... 4,241
Receivables for:
Capital stock sold......................................... 923,738
Dividends.................................................. 13,839
Other...................................................... 10,832
-----------
Total Assets ........................................ 36,535,334
-----------
LIABILITIES:
Payables for:
Capital stock redeemed..................................... 2,000
Expense Payment Fee (Note 2)............................... 31,084
Administrative fee (Note 2)................................ 4,440
-----------
Total Liabilities .................................... 37,524
-----------
NET ASSETS ......................................................$36,497,810
===========
Net Assets Consist of:
Paid-in capital.............................................. $30,237,266
Accumulated net realized loss on investments.................. (29,265)
Net unrealized appreciation................................... 6,289,809
-----------
Net Assets.......................................................$36,497,810
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($36,497,810 / 2,850,745 shares).............................. $12.80
======
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX-EFFICIENT EQUITY FUND
STATEMENT OF OPERATIONS
For the period from November 2, 1998
(commencement of operations) to October 31, 1999
INVESTMENT INCOME:
Income:
Dividends (net of withholding taxes of $5,461) ......... $ 257,043
Interest ............................................... 24,068
----------
Total Income ..................................... 281,111
----------
Expenses:
Expense payment fee (Note 2) ........................... 310,596
Administrative fee (Note 2) ............................ 44,371
----------
Total Expenses ................................... 354,967
----------
Net Investment Loss .............................. (73,856)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS) (Notes 1 and 3):
Net realized loss on investments ......................... (29,265)
Net change in unrealized appreciation on investments ..... 6,289,809
----------
Net Realized and Unrealized Gain ................. 6,260,544
----------
Net Increase in Net Assets Resulting from Operations ..... $6,186,688
==========
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX-EFFICIENT EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the
period from
November 2, 1998
(commencement
of operations) to
October 31, 1999
-----------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss .................................. $ (73,856)
Net realized loss on investments ..................... (29,265)
Net change in unrealized appreciation on investments . 6,289,809
-----------
Net increase in net assets resulting from operations 6,186,688
-----------
Capital stock transactions (Note 4):
Net proceeds from sales of capital stock ............. 36,603,730
Net cost of capital stock redeemed ................... (6,292,608)
-----------
Net increase in net assets resulting
from capital transactions ........................ 30,311,122
-----------
Total increase in net assets ................... 36,497,810
NET ASSETS:
Beginning of period ..................................... 0
-----------
End of period ........................................... $36,497,810
===========
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX-EFFICIENT EQUITY FUND
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a
share outstanding throughout the period
For the
period from
November 2, 1998
(commencement
of operations) to
October 31, 1999
-----------------
Net asset value, beginning of period .......................... $10.00
Income from investment operations:
Net investment income ...................................... (0.03)
Net realized and unrealized gain ........................... 2.83
------
Net asset value, end of period ............................. $12.80
======
Total return .................................................. 28.00%
Ratios/Supplemental data:
Net assets, end of period (000's omitted) .................. $36,498
Expenses as a percentage of average net assets1 ............ 1.20%(2)
Ratio of net investment income to average net assets ....... (0.25%)(2)
Portfolio turnover rate ....................................... 37%(2)
- ----------
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 ........... 1.29%
Total return ...................................... 27.91%
2 Annualized.
See Notes to Financial Statements.
<PAGE>
THE 59 WALL STREET TAX-EFFICIENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies. The 59 Wall Street
Tax-Efficient Equity 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 November 2, 1999.
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. (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) 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; (4) 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. 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. Interest income is accrued daily.
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 realized gains or net investment income. 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.
D. Dividends and Distributions to Shareholders. Distributions from
net capital gains, if any, are paid annually and are recorded on the
ex-dividend date.
<PAGE>
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 0.65% of the Fund's average daily net assets.
Administrative Fee. The Corporation has an administrative agreement with
Brown Brothers Harriman & Co. (the "Administrator") for which it pays the
Administrator a fee calculated daily and paid monthly at an annual rate
equivalent to 0.15% of the Fund's average daily net assets. The Administrator
has a subadministration services agreement with 59 Wall Street Administrators,
Inc. for which 59 Wall Street Administrators, Inc. receives such compensation as
is from time to time agreed upon, but not in excess of the amount paid to the
Administrator. For the year ended October 31, 1999 the Fund incurred $44,371 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 average daily net assets of the Fund.
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 1.20%
of the Fund's average daily net assets. For the year ended October 31, 1999, 59
Wall Street Administrators, Inc. incurred $338,663 in expenses, including
investment advisory fees of $192,274 and shareholder servicing/eligible
institution fees of $73,951, on behalf of the Fund. The Fund's expense payment
fee agreement will terminate on July 31, 2003.
3. Investment Transactions. For the period ended October 31, 1999 the cost
of purchases and the proceeds of sales of investment securities other than
short-term investments were $40,652,197 and $11,330,057, respectively . For that
same period, the Fund paid brokerage commissions of $41,963 to Brown Brothers
Harriman & Co. for transactions executed on its behalf. Custody fees for the
Fund were reduced by $258 as a result of an expense offset arrangement with the
Fund's custodian.
4. Capital Stock. The Corporation is permitted to issue 2,500,000,000
shares of capital stock, par value $0.001 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:
For the year ended October 31, 1999
-----------------------------------
Capital stock sold ........ 3,373,701
Capital stock repurchased . (522,956)
---------
Net increase .............. 2,850,745
=========
5. Federal Income Tax Status. At October 31, 1999, the Fund, for federal
income taxes purposes, had a capital loss carryforward of $29,265, which may be
applied against any net taxable realized gain of each succeeding year until the
earliest of its utilization or expiration on October 31, 2007.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders The 59 Wall Street Tax-Efficient Equity 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 Tax-Efficient
Equity Fund (a series of The 59 Wall Street Fund, Inc.) as of October 31, 1999,
the related statements of operations and changes in net assets and the financial
highlights for the period from November 2, 1998 (commencement of operations) to
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
audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The 59 Wall Street
Tax-Efficient Equity Fund at October 31, 1999, and the results of its
operations, the changes in its net assets, and its financial highlights for the
period from November 2, 1998 to October 31, 1999, 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.
Tax-Efficient Equity Fund
The Tax-Efficient Equity Fund rose 28.0% over its first fiscal year of
operation, outpacing the 25.7% total return of the S&P 500 Index over the past
year. The Fund outperformed its benchmark for three main reasons. First, its
overall positioning as a growth oriented portfolio helped as growth outperformed
value over the past year by 7 1/4%. Second, stock selection helped as individual
issues, particularly in the energy, retail and service economic sectors,
outperformed their respective economic sector returns. Finally, the fund had an
over-weighting within the service economic sector for the year and an
under-weighting within the utility economic sector, both of which added to
performance versus the benchmark.
Tax-Efficient Equity Fund Growth of $10,000
[Table depicted as a line chart]
DATE Tax Efficient Equity Fund* S&P 500 Index
---- ------------------------- --------------
11/2/98 10,000 10,000
11/30/98 10,420 10,606
12/31/98 11,390 11,217
01/31/99 11,650 11,685
02/28/99 11,540 11,322
03/31/99 12,120 11,775
04/30/99 12,490 12,231
05/31/99 12,240 11,943
06/30/99 12,650 12,605
07/31/99 12,300 12,212
08/31/99 12,430 12,151
09/30/99 12,070 11,818
10/31/99 12,800 12,566
- --------------------------------------------------------------------------------
Total Return
------------
Inception to 10/31/99
----------------------------------
28.00%
- --------------------------------------------------------------------------------
*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.
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.
