THE 59 WALL STREET TAX-EFFICIENT EQUITY FUND
Portfolio of Investments
October 31, 2000
Shares Value
------ -----------
COMMON STOCKS (93.2%)
BASIC MATERIALS (1.2%)
14,000 Alcoa, Inc. ................................ $ 401,625
5,675 International Paper Co. .................... 207,847
-----------
609,472
-----------
CAPITAL GOODS/DURABLES (7.3%)
16,324 Dover Corp. ................................ 692,750
34,967 General Electric Co. ....................... 1,916,629
11,675 Illinois Tool Works, Inc. .................. 648,692
11,675 Solectron Corporation* ..................... 513,700
-----------
3,771,771
-----------
CONSUMER NON-DURABLES (5.3%)
9,335 Avon Products, Inc. ........................ 452,747
13,999 Coca Cola Co. .............................. 845,190
12,000 Colgate Palmolive .......................... 705,120
12,835 Estee Lauder Companies, Inc. ............... 596,025
2,025 Procter & Gamble Co. ....................... 144,661
-----------
2,743,743
-----------
ENERGY (7.8%)
21,009 Exxon Mobile Corp. ......................... 1,873,740
18,669 Royal Dutch Petroleum Co. .................. 1,108,472
25,654 Williams Companies, Inc. ................... 1,072,658
-----------
4,054,870
-----------
FINANCE (17.3%)
10,505 American Express Co. ....................... 630,300
16,603 American International Group ............... 1,627,094
23,333 Bank of New York Co., Inc. ................. 1,343,106
37,341 Citigroup, Inc. ............................ 1,965,070
12,825 Fannie Mae ................................. 987,525
29,967 Fleetboston Financial Corp. ................ 1,138,746
14,000 Merrill Lynch & Co., Inc. .................. 980,000
6,010 SunTrust Banks, Inc. ....................... 293,363
-----------
8,965,204
-----------
HEALTH (11.6%)
20,989 Bristol Myers Squibb Co. ................... 1,279,017
10,495 Guidant Corp.* ............................. 555,579
16,329 Lilly (Eli) & Co. .......................... 1,459,404
13,989 Medtronic, Inc. ............................ 759,778
23,340 Pharmacia Corp. ............................ 1,283,700
5,825 PE Corp Biosystems ......................... 681,525
-----------
6,019,003
-----------
RETAIL (5.8%)
9,335 Best Buy Co., Inc.* ........................ 468,500
18,665 Costco Wholesale Corp.* .................... 683,606
13,995 Gap, Inc. .................................. 361,246
21,008 Home Depot, Inc. ........................... 903,344
10,500 Kohls Corp.* ............................... 568,969
-----------
2,985,665
-----------
SERVICES (10.7%)
16,324 Cox Communications, Inc.* .................. 719,276
23,300 Mcleod, Inc.* .............................. 448,525
14,009 New York Times Co. (Class A) ............... 514,831
28,634 Qwest Communications
International, Inc.* ..................... 1,392,328
4,700 SBC Communications, Inc. ................... 271,131
200 Sprint Corp. PCS Group* .................... 7,625
17,464 Time Warner, Inc. .......................... 1,325,692
15,200 Viacom, Inc. (Class B)* .................... 864,500
-----------
5,543,908
-----------
TECHNOLOGY (25.4%)
4,775 Applied Materials, Inc.* ................... 253,672
23,324 Automatic Data
Processing, Inc. ......................... 1,523,349
36,338 Cisco Systems, Inc.* ....................... 1,957,710
6,825 Computer Associates
International, Inc. ...................... 217,547
1,674 Dell Computer Corp.* ....................... 49,383
13,995 EMC Corp.* ................................. 1,246,430
<PAGE>
THE 59 WALL STREET TAX-EFFICIENT EQUITY FUND
Portfolio of Investments
October 31, 2000 (continued)
Shares Value
------ -----------
TECHNOLOGY (continued)
17,174 International Business
Machines Corp. ........................... $1,691,639
18,300 Kla Tencor Corp.* .......................... 618,769
3,989 Microsoft Corp.* ........................... 274,742
16,325 Nortel Networks Corp. ...................... 742,787
21,010 STmicroelectronics ......................... 1,091,207
16,329 Sun Microsystems, Inc.* .................... 1,810,478
34,003 Texas Instruments, Inc. .................... 1,668,272
-----------
13,145,985
-----------
UTILITIES (0.8%)
11,669 DQE, Inc. .................................. 407,686
-----------
TOTAL COMMON STOCKS
(identified cost $40,195,024) .............. 48,247,307
-----------
Principal
Amount
---------
U.S. Treasury (6.5%)
$3,390,000 U.S. Treasury Bills, 11/30/00
(identified cost $3,373,988) ............... 3,373,887
-----------
TOTAL INVESTMENTS (identified cost $43,569,012) (a) ..... 99.7% $51,621,194
CASH AND OTHER ASSETS LESS
LIABILITIES ........................................... 0.3 143,894
----- -----------
NET ASSETS .............................................. 100.0% $51,765,088
===== ===========
----------
* Non-income producing security
(a) The aggregate cost for federal income tax purpose is $43,860,270, the
aggregate gross unrealized appreciation is $9,670,702, and the aggregate
gross unrealized depreciation is $1,909,778, the net unrealized appreciation
of $7,760,924.
The accompanying notes are an integral part of these financial statements.
<PAGE>
The 59 WALL STREET TAX-EFFICIENT EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
ASSETS:
Investments in securities, at value
(identified cost $43,569,012) ................................. $51,621,194
Cash ............................................................ 3,114,732
Cash held as collateral on futures contracts .................... 187,500
Receivables for:
Securities sold ............................................... 901,579
Capital stock sold ............................................ 35,000
Variation margin .............................................. 72,500
Dividends ..................................................... 22,260
-----------
Total Assets ............................................ 55,954,765
-----------
LIABILITIES:
Payables for:
Securities purchased .......................................... 4,070,708
Capital stock redeemed ........................................ 16,157
Expense payment fee ........................................... 89,973
Administrative fee ............................................ 12,839
-----------
Total Liabilities ....................................... 4,189,677
-----------
NET ASSETS ........................................................ $51,765,088
===========
Net Assets Consist of:
Paid-in capital ................................................. $43,766,004
Accumulated net realized loss ................................... (267,973)
Net unrealized appreciation ..................................... 8,267,057
-----------
Net Assets ........................................................ $51,765,088
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($51,765,088 / 3,827,976 shares) ................................ $13.52
======
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE 59 WALL STREET TAX-EFFICIENT EQUITY FUND
STATEMENT OF OPERATIONS
October 31, 2000
NET INVESTMENT INCOME:
Income:
Dividends ............................................. $ 398,764
Interest .............................................. 20,787
-----------
Total Income .................................... 419,551
-----------
Expenses:
Expense payment fee ................................... 489,565
Administrative fee .................................... 69,923
-----------
Total Expenses .................................. 559,488
-----------
Net Investment Loss ............................. (139,937)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on investments ......................... (223,236)
Net change in unrealized appreciation on investments
and futures contracts 1,977,248
-----------
Net Realized and Unrealized Gain ................ 1,754,012
-----------
Net Increase in Net Assets Resulting from Operations ..... $ 1,614,075
===========
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE 59 WALL STREET TAX-EFFICIENT EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
period from
November 2, 1998
For the (commencement
year ended of operations) to
October 31, 2000 October 31, 1999
---------------- -----------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment loss ............................................. $ (139,937) $ (73,856)
Net realized loss on investments ................................ (223,236) (29,265)
Net change in unrealized appreciation on investments
and future contracts .......................................... 1,977,248 6,289,809
----------- -----------
Net increase in net assets resulting from operations ......... 1,614,075 6,186,688
----------- -----------
Capital transactions (Note 4):
Net proceeds from sales of capital stock ........................ 18,740,446 36,603,730
Net cost of capital stock redeemed .............................. (5,087,243) (6,292,608)
----------- -----------
Net increase in net assets resulting from capital transactions 13,653,203 30,311,122
----------- -----------
Total increase in net assets ............................ 15,267,278 36,497,810
NET ASSETS:
Beginning of period ............................................... 36,497,810 --
----------- -----------
End of period ..................................................... $51,765,088 $36,497,810
=========== ===========
</TABLE>
The accompanying notes are an integral part of these 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
<TABLE>
<CAPTION>
For the
period from
November 2, 1998
For the (commencement
year ended of operations) to
October 31, 2000 October 31, 1999
--------------- ----------------
<S> <C> <C>
Net asset value, beginning of period ......................... $ 12.80 $ 10.00
Income from investment operations:
Net investment loss ....................................... (0.04) (0.03)
Net realized and unrealized gain .......................... 0.76 2.83
------- -------
Net asset value, end of period ............................ $ 13.52 $ 12.80
======= =======
Total return1 ................................................ 5.62% 28.00%
Ratios/Supplemental data:
Net assets, end of period (000's omitted) ................. $51,765 $36,498
Expenses as a percentage of average net assets(1).......... 1.20% 1.20%(2)
Ratio of net investment income to average net assets ...... (0.30)% (0.25)%(2)
Portfolio turnover rate ...................................... 67% 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 .............. 1.35% 1.29%
Total return ......................................... 5.47% 27.91%
(2) Annualized.
</TABLE>
The accompanying notes are an integral part of these 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, 1998.
The Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, 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
accounting principles generally accepted in the United States of America,
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 differences such as losses deferred due
to "wash sale" transactions and utilization of capital loss carryforwards.
These differences may result in temporary over-distributions for financial
statement purposes and are classified as distributions in excess of
accumulated net realized gains or net investment income. These
distributions do not constitute a return of capital. Permanent differences
are reclassified on the statement of assets and liabilities based upon
their tax reclassification. 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.
D. Dividends and Distributions to Shareholders. 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 (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.
<PAGE>
THE 59 WALL STREET TAX-EFFICIENT EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (continued)
Administrative Fee. The Corporation has an administrative agreement with
Brown Brothers Harriman (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, 2000 the Fund incurred $69,923 for
administrative services.
Custody Fee. The Corporation has a custody agreement with Brown Brothers
Harriman (the "Custodian") for which the Custodian receives a fee calculated and
paid monthly. Custody fees for the Fund were reduced by $9,198 as a result of an
expense arrangement with the Fund's custodian.
Shareholder Servicing/Eligible Institution Agreement. The Corporation has
a shareholder servicing agreement and an eligible institution agreement with
Brown Brothers Harriman for which Brown Brothers Harriman 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, 2000, 59
Wall Street Administrators, Inc. incurred $557,347 in expenses, including
investment advisory fees of $303,000, shareholder servicing/eligible institution
fees of $116,642 and custody fees of $7,301 paid to Brown Brothers Harriman on
behalf of the Fund. The Fund's expense payment fee agreement will terminate on
July 31, 2003.
3. Investment Transactions. For the year ended October 31, 2000, the cost
of purchases and the proceeds of sales of investment securities other than
short-term investments were $41,898,654 and $30,773,270, respectively. For that
same period, the Fund paid brokerage commissions of $36,477 to Brown Brothers
Harriman for transactions executed on its behalf.
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 years ended October 31
------------------------------
2000 1999
---- ----
Capital stock sold .......................... 1,345,351 3,373,701
Capital stock repurchased ................... (368,120) (522,956)
Net increase ................................ 977,231 2,850,745
========= =========
5. Financial Futures Contracts
As of October 31, 2000, the Fund held open futures contracts. The
contractual amount of the futures contracts represents the investment the Fund
has in a particular contract and does not necessarily represent the amounts
potentially subject to risk. The measurement of risk associated with futures
contracts is meaningful only when all related and offsetting transactions are
considered. A summary of obligations under open futures contracts at October 31,
2000, is as follows:
<TABLE>
<CAPTION>
Expiration Unrealized
Position Date Contracts Index Contract Value Appreciation
------- --------------- --------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Long December 2000 10 S&P 500 $3,385,625 $214,875
</TABLE>
As of October 31, 2000, the Fund had segregated sufficient cash and/or
securities to cover margin requirements on open futures contracts.
<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, 2000,
the related statement of operations for the year then ended, and the statement
of changes in net assets and the financial highlights for the year then ended
and 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
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits 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, 2000 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 The 59 Wall Street
Tax Efficient Equity Fund at October 31, 2000, and the results of its
operations, the changes in its net assets, and its financial highlights for the
respective stated periods in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 22, 2000
<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,
2000.
Tax Efficient Equity Fund
The Tax Efficient Equity Fund slightly trailed the S&P 500 for the fiscal
year ended October 31, 2000, returning 5.62% versus 6.09% for the S&P 500 index
on a total return basis. The Fund's performance was adversely affected by a
slight orientation towards growth stocks, particularly in the summer months as
the S&P Barra Growth index underperformed the S&P Barra Value index by over 15%
in the three months ending with October, an unusually large divergence between
the two indices. Concern over economic conditions and industry specific revenue
growth prospects, particularly within the technology economic sector, all
contributed to this growth/value divergence. Our economic sector weightings for
the previous year also produced a mixed picture. Our underweight in healthcare
due to concerns over the Medicare coverage political cloud hanging over the
pharmaceutical industry proved to be overwhelmed by investors putting funds into
pharmaceutical issues as a defensive sector in light of economic weakness. Our
overweight in financial services, particularly the larger capitalization names
in the sector, was a positive contribution to performance.
Tax-Efficient Equity Fund Growth of $10,000
----------------------------
Total Return
----------------------------
One Year Inception
Ended to 10/31/00
10/31/00 (Annualized)
----------------------------
5.62% 16.31%
----------------------------
Date Tax Efficient Equity Fund S&P 500
---- ------------------------- -------
11/2/1998 $10,000 $10,000
(inception)
04/30/99 12,490 12,231
10/31/99 12,800 12,566
04/30/00 14,120.00 13,469.95
10/31/00 13,520.00 13,331.63
*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
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
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.
Tax-Efficient Equity Fund
ANNUAL REPORT
October 31, 2000
