File No. 811-10073
As filed with the Securities and Exchange Commission on August 21, 2000.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 / X /
---
Amendment No. __ /___/
(Check appropriate box or boxes)
BBH COMMON SETTLEMENT FUND, INC.
(Exact Name of Registrant as Specified in Charter)
63 Wall Street, New York, NY 10005
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (800) 625-5759
Philip W. Coolidge, 21 Milk Street, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copy to:
John E. Baumgardner, Jr., Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
<PAGE>
PART A
Responses to Items 1 through 3, 5 and 9 have been omitted pursuant to
Item 2(b) of Instruction B of the General Instructions to Form N-1A.
Offering Circular
BBH Common Settlement Fund
(BBH ComSet)
The date of this Offering Circular is August 21, 2000.
Reference No.: ________
<PAGE>
TABLE OF CONTENTS
Page
Investment Objective ..................................................... 3
Investment Strategies ..................................................... 3
Principal Risk Factors .................................................... 3
Fees and Expenses of BBH ComSet............................................ 5
Fund Performance........................................................... 6
Investment Adviser......................................................... 7
Shareholder Information ................................................... 8
Additional Investment Information ......................................... 10
[TEXT APPEARS IN BOLDFACE]
Eligible Shareholders - While other institutions are permitted to purchase
shares of BBH ComSet, BBH ComSet has been organized for the use by entities that
are registered with the Commodity Futures Trading Commission (i.e. Future
Commission Merchants, Future Clearing Houses and Commodity Pools).
[TEXT APPEARS IN BOLDFACE]
In making an investment decision shareholders must rely on their own examination
of the issuer and the terms of the offering, including the merits and risks
involved. Shares of the BBH ComSet have not been recommended by any U.S. Federal
or state or non-U.S. securities commissions or regulatory authorities.
Furthermore, none of the foregoing authorities has confirmed the accuracy or
determined the adequacy of this document. Any representation to the contrary is
a criminal offense.
[TEXT APPEARS IN BOLDFACE]
Shares of the BBH ComSet have not and will not be registered under the
Securities Act of 1933, as amended ("1933 Act"), and will be issued solely in
private placement transactions that do not involve a public offering within
Section 4(2) of the 1933 Act. Shares of the BBH ComSet may not be transferred or
resold except as permitted under the 1933 Act and the applicable state or other
securities laws pursuant to registration or exemption therefrom. There will be
no public market for shares of the BBH ComSet, and there is no obligation on the
part of any person to register shares of the BBH ComSet under the 1933 Act or
any state securities law.
<PAGE>
INVESTMENT OBJECTIVE
The investment objective of the BBH Common Settlement Fund, Inc. ("BBH
ComSet") is to provide investors with as high a level of income as is consistent
with the preservation of capital and the maintenance of liquidity.
INVESTMENT STRATEGIES
BBH ComSet invests all of its assets in the BBH U.S. Money Market
Portfolio (the "Portfolio"), an investment company that has the same objective
as BBH ComSet. Brown Brothers Harriman & Co., the Investment Adviser of the
Portfolio, invests only in the highest rated, short-term money market
instruments denominated in U.S. dollars. These instruments include U.S.
Government securities and bank obligations of U.S. and non-U.S. banks (such as
certificates of deposit and fixed time deposits), commercial paper, repurchase
agreements, reverse repurchase agreements, asset-backed and mortgage-backed
securities, when-issued and delayed delivery securities, bonds issued by U.S.
corporations and obligations of certain supranational organizations.
PRINCIPAL RISK FACTORS
The principal risks of investing in BBH ComSet are described below. A
shareholder may lose money by investing in BBH ComSet.
o Market Risk:
The price of a debt security will fluctuate in response to changes in
interest rates.
o Interest Rate Risk:
The amount of income paid to the shareholder by BBH ComSet will fluctuate
depending on day-to-day variations in short-term interest rates. In general, the
prices of debt securities fall when interest rates rise.
o Credit Risk:
Credit risk refers to the likelihood that an issuer will default on
interest or principal payments. Changes in the financial condition of an issuer,
changes in specific economic or political conditions that affect a particular
type of issuer, and changes in general economic or political conditions can
adversely affect the credit quality or value of an issuer's securities. Entities
providing credit support or a maturity-shortening structure also can be affected
by these types of changes. Because the Portfolio invests a significant portion
of its assets in bank obligations, the value of these investments and the net
assets of the Portfolio could decline more dramatically as a result of adverse
events affecting the bank industry.
o Foreign Investment Risk:
Because the Portfolio invests in securities issued by non-U.S. banks, the
Portfolio is subject to additional risks on these securities such as adverse
political, social and economic developments abroad, different kinds and levels
of market and issuer regulations and the different characteristics of overseas
economies and markets. There may be rapid changes in the values of these
securities.
<PAGE>
[TEXT APPEARS IN BOLDFACE]
Investments in BBH ComSet are neither insured nor guaranteed by the U.S.
Government. Shares of BBH ComSet are not deposits or obligations of, or
guaranteed by, Brown Brothers Harriman & Co. or any other bank, and are not
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other federal, state or other governmental agency. Although BBH ComSet
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in BBH ComSet.
<PAGE>
FEES AND EXPENSES OF THE FUND
The tables below describe the fees and expenses1 that a shareholder may
pay if that shareholder invests in BBH ComSet.
SHAREHOLDER FEES
(Fees paid directly from a shareholder's account)
Maximum Sales Charge (Load)
Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None
Redemption Fee None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES
(Expenses that are deducted from Fund assets
as a percentage of average net assets)
Other Expenses
Administration Fee 0.045%
Expense Payment Agreement 0.115%2
-----
Total Annual Fund Operating Expenses 0.160%
=====
1The expenses shown for BBH ComSet include the expenses of the Portfolio.
2The expense payment agreement is a contractual arrangement which limits the
total annual fund operating expenses to 0.16%. The arrangement will continue
until June 30, 2003. Included within the expense payment agreement is a
management fee of 0.10%.
<PAGE>
FUND PERFORMANCE
Historical total return information for any period or portion thereof prior to
the establishment of BBH ComSet will be that of the BBH U.S. Money Market
Portfolio adjusted to assume that all charges, expenses and fees which are
presently in effect were deducted during such periods, as permitted by
applicable SEC staff interpretations. For current yield information, please call
800-625-5759 toll free, or contact your account representative.
[Graph depicted as a Bar Chart]
<TABLE>
<CAPTION>
Total Return (% per calendar year)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
8.21 6.31 3.91 3.11 3.95 5.90 5.34 5.48 5.40 5.12
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------ ------------------------- -------------------------
Highest and Lowest Return
(Quarterly 1993-1999)
------------------------------------------------------------------ ------------------------- -------------------------
<S> <C> <C>
Return Quarter Ending
Highest 1.51% 6/95
Lowest 0.76% 6/93
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------- ------------------------- ---------------------------------------------------
Average Annual Total Returns
(through June 30, 2000)
---------------------------------------- ------------------------- ---------------------------------------------------
<S> <C> <C> <C>
1 Year 5 Years 10 Years
5.69% 5.46% 5.15%
---------------------------------------- ------------------------- ------------------------- -------------------------
</TABLE>
<PAGE>
INVESTMENT ADVISER
The Investment Adviser to the Portfolio is Brown Brothers Harriman & Co.,
Private Bankers, a New York limited partnership established in 1818. The firm is
subject to examination and regulation by the Superintendent of Banks of the
State of New York and by the Department of Banking of the Commonwealth of
Pennsylvania. The firm is also subject to supervision and examination by the
Commissioner of Banks of the Commonwealth of Massachusetts. The Investment
Adviser is located at 59 Wall Street, New York, NY 10005.
The Investment Adviser provides investment advice and portfolio
management services to the Portfolio. Subject to the general supervision of the
Trustees, the Investment Adviser makes the day-to-day investment decisions,
places the purchase and sale orders for the portfolio transactions, and
generally manages the investments. The Investment Adviser provides a broad range
of investment management services for customers in the United States and abroad.
At June 30, 2000, it managed total assets of approximately $35 billion.
A team of individuals manages the Portfolio on a day-to-day basis. This
team includes Mr. Glenn E. Baker, Mr. John Ackler, and Mr. Raymond Humphrey of
Brown Brothers Harriman & Co. Mr. Baker holds a B.A. and a M.B.A. from the
University of Michigan and is a Chartered Financial Analyst. He joined Brown
Brothers Harriman & Co. in 1991. Mr. Ackler holds a B.S. from Philadelphia
University and an M.B.A. from Lehigh University. He joined Brown Brothers
Harriman & Co. in 1999. Prior to joining Brown Brothers Harriman & Co., he
worked for Nomura Asset Management USA Inc. Mr. Humphrey holds a B.A. from
Montclair State College and an M.B.A. from New York University. He joined Brown
Brothers Harriman & Co. in 1991.
As compensation for the services rendered and related expenses such as
salaries of advisory personnel borne by the Investment Adviser, under the
Investment Advisory Agreement, the Portfolio pays the Investment Adviser an
annual fee, computed daily and payable monthly, equal to 0.10% of the average
daily net assets of the Portfolio.
SHAREHOLDER INFORMATION
NET ASSET VALUE
The net asset value of BBH ComSet is determined every day the New York
Stock Exchange is open for regular trading and the Federal Reserve banks are
open for business. BBH ComSet calculates its net asset value once daily at 4:00
P.M., New York time.
It is anticipated that the net asset value per share of BBH ComSet will
remain constant at $1.00. No assurance can be given that this goal can be
achieved.
The Portfolio's assets are valued by using the amortized cost method of
valuation. This method involves valuing a security at its cost at the time of
purchase and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. The market value of the securities held by
the Portfolio fluctuates on the basis of the creditworthiness of the issuers of
such securities and on the levels of interest rates generally. While the
amortized cost method provides certainty in valuation, it may result in periods
when the value so determined is higher or lower than the price the Portfolio
would receive if the security were sold.
<PAGE>
PURCHASE OF SHARES
Shares of BBH ComSet are issued solely in private placement transactions.
Investments in BBH ComSet may only be made in accordance with Regulation D of
the 1933 Act. Eligible shareholders are "accredited investors" and include
Future Commodity Merchants (FCMs) registered with the Commodity Futures Trading
Commission (CFTC) or a Futures Exchange or its clearinghouse which has been
designated by the CFTC pursuant to the Commodity Exchange Act as a contract
market for certain futures contracts and options on futures contracts. This
Offering Circular does not constitute an offer to sell, or the solicitation of
an offer to buy, any "security" within the meaning of the Securities Act of
1933.
An investment in BBH ComSet may be made without a sales load.
Shareholders may invest into BBH ComSet on any day the net asset value is
calculated if BBH ComSet receives an order, including acceptable payment for
such order, prior to such calculation. Shares of BBH ComSet are entitled to
dividends declared on the day BBH ComSet executes the purchase order on the
books of BBH ComSet.
An investor may place purchase orders for Fund shares through Brown
Brothers Harriman & Co. Such an investor has such shares held directly in the
investor's name on the books of BBH ComSet and is responsible for arranging for
the payment of the purchase price of Fund shares. BBH ComSet executes all
purchase orders for initial and subsequent purchases at the net asset value per
share next determined after Brown Brothers Harriman & Co. has received payment
in the form of a cashier's check drawn on a U.S. bank, a check certified by a
U.S. bank or a wire transfer. The minimum initial investment in BBH ComSet is
$10 million ($10,000,000). Because BBH ComSet intends to be fully invested at
all times as is reasonably practicable in order to enhance the yield on its
assets, investments must be made in federal funds (i.e., monies credited to the
custodian of the Fund's account by a Federal Reserve Bank).
BBH ComSet reserves the right to cease accepting investments at any time
or reject any investment order.
REDEMPTION OF SHARES
A shareholder in BBH ComSet may redeem all or any portion of its
investment at the net asset value next determined after a request is furnished
by the shareholder to BBH ComSet. The proceeds of a redemption will be paid by
BBH ComSet on the same business day that the redemption is effected. Investments
in BBH ComSet may not be transferred.
Shareholders must redeem shares held by Brown Brothers Harriman & Co. on
behalf of such shareholder pursuant to arrangements made between that
shareholder and Brown Brothers Harriman & Co. Brown Brothers Harriman & Co. pays
proceeds of a redemption to that shareholder's account on a date established by
Brown Brothers Harriman & Co.
The right of any shareholder to receive payment with respect to any
redemption may be suspended or the payment of the proceeds therefrom postponed
during any period in which the New York Stock Exchange is closed or the Federal
Reserve Banks are closed for business (other than weekends or holidays) or
trading on the New York Stock Exchange is restricted or, if an emergency exists.
<PAGE>
BBH ComSet reserves the right under certain circumstances, such as
accommodating requests for substantial redemptions, to pay distributions in kind
to shareholders (i.e., to distribute portfolio securities as opposed to cash).
If securities are distributed, a shareholder could incur brokerage, tax or other
charges in converting the securities to cash. In addition, distribution in kind
may result in a less diversified portfolio of investments or adversely affect
the liquidity of BBH ComSet.
DIVIDENDS AND DISTRIBUTIONS
The net income and short-term capital gains and losses of BBH ComSet, if
any, are declared as a dividend daily and paid monthly. Determination of BBH
ComSet's net income is made each business day immediately prior to the
determination of the net asset value per share of BBH ComSet. Net income for
days other than such business days is determined at the time of the
determination of the net asset value per share of BBH ComSet on the immediately
preceding business day.
Dividends declared are payable to shareholders of record of BBH ComSet on
the date of determination. Shares purchased through the submission of a purchase
order prior to 4:00 P.M., New York time on such a business day begin earning
dividends on that business day. Shares redeemed do not qualify for a dividend on
the business day that the redemption is executed.
Unless a shareholder whose shares are held directly in the
shareholder's name on the books of BBH ComSet elects to have dividends paid in
cash, BBH ComSet automatically reinvests dividends in additional Fund shares
without reference to the minimum subsequent purchase requirement.
TAXES
Dividends of net income and net short-term capital gains, if any, are
taxable to shareholders of BBH ComSet as ordinary income, whether such dividends
are paid in cash or reinvested in additional shares. The treatment of BBH ComSet
and its shareholders in those states which have income tax laws might differ
from treatment under federal income tax laws. Therefore, distributions to
shareholders may be subject to additional state and local taxes. Shareholders
are urged to consult their tax advisors regarding any state or local taxes.
Foreign Investors
BBH ComSet is designed for investors who are either citizens of the
United States or aliens subject to United States income tax. Prospective
investors who are not citizens of the United States and who are not aliens
subject to United States income tax are subject to United States withholding tax
on the entire amount of all dividends. Therefore, such investors should not
invest in BBH ComSet since alternative investments would not be subject to
United States withholding tax.
<PAGE>
ADDITIONAL INVESTMENT INFORMATION
License Agreement. Pursuant to a license agreement between BBH ComSet and
Brown Brothers Harriman & Co. dated August 15, 2000, BBH ComSet may continue to
use in its name "BBH". The agreement may be terminated by Brown Brothers
Harriman & Co. at any time upon written notice to BBH ComSet upon the expiration
or earlier termination of any investment advisory agreement between BBH ComSet
or any investment company in which BBH ComSet invests all of its assets and
Brown Brothers Harriman & Co. Termination of the agreement would require BBH
ComSet to change its name and the name of BBH ComSet to eliminate all reference
to "BBH".
Investment Structure. BBH ComSet seeks to achieve its investment
objective by investing all of its assets in the Portfolio, a diversified
open-end investment company having the same investment objective as BBH ComSet.
Other investors, including mutual funds and institutional investors, may invest
in the Portfolio on the same terms and conditions as BBH ComSet. However, these
other investors may have different operating expenses which may generate
different aggregate performance results. BBH ComSet may withdraw its investment
in the Portfolio at any time as a result of changes in the Portfolio's
investment objective, policies or restrictions of if the Board of Directors
determines that it is otherwise in the best interests of BBH ComSet to do
so.Investment Securities. The Portfolio will comply with CFTC Rule 1.25 which
governs the investment of customer funds as defined in the Commodity Exchange
Act. Eligible investments include the following:
U.S. Government Securities. The Portfolio may invest in securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities. These
securities, including those which are guaranteed by federal agencies or
instrumentalities, may or may not be backed by the "full faith and credit" of
the United States.
Bank Obligations. The Portfolio may invest in U.S. dollar-denominated
high quality securities. These securities include negotiable certificates of
deposit and fixed time deposits of banks, savings and loan associations and
savings banks organized under the laws of the United States or any state
thereof. The Portfolio's investments also include obligations of non-U.S.
branches of such banks, or of non-U.S. banks or their U.S. or non-U.S. branches.
(The Portfolio may only invest in obligations of such non-U.S. banks if such
bank has more than $500 million in total assets, and has an outstanding
short-term debt issue rated within the highest rating category for short-term
debt obligations by at least two (unless only rated by one) nationally
recognized statistical rating organizations (e.g., Moody's and S&P). Issues that
do not carry a short-term rating but fall within the maturity parameters of the
Portfolio, must carry a long-term debt rating within the two highest debt rating
categories by at least two nationally recognized statistical rating
organizations.
Commercial Paper. The Portfolio may invest in commercial paper including
variable rate demand master notes issued by U.S. corporations or by non-U.S.
corporations which are direct parents or subsidiaries of U.S. corporations.
Master notes are demand obligations that permit the investment of fluctuating
amounts at varying market rates of interest pursuant to arrangements between the
issuer and a U.S. commercial bank acting as agent for the payees of such notes.
Master notes are callable on demand, but are not marketable to third parties.
Consequently, the right to redeem such notes depends on the borrower's ability
to pay on demand. At the date of investment, commercial paper must be rated
within the highest rating category for short-term debt obligations by at least
two (unless only rated by one) nationally recognized statistical rating
organizations (e.g., Moody's and S&P) or, if unrated, are of comparable quality
as determined by or under the direction of the Portfolio's Board of Trustees.
Repurchase Agreements. A repurchase agreement is an agreement in which
the seller (the "Lender") of a security agrees to repurchase from the Portfolio
the security sold at a mutually agreed upon time and price. As such, it is
viewed as the lending of money to the Lender. The Portfolio always receives as
collateral securities which are eligible securities for the Portfolio to
purchase.
Other Obligations. Assets of the Portfolio may be invested in bonds and
asset-backed securities with maturities not exceeding thirteen months, issued by
U.S. corporations which at the date of investment are rated within the highest
short-term rating category for such obligations or the two highest long-term
rating catergories by at least two (unless only rated by one) nationally
recognized statistical rating organizations (e.g., Moody's and S&P) or, if
unrated, are of comparable quality as determined by or under the direction of
the Portfolio's Board of Trustees.
Assets of the Portfolio may also be invested in obligations of the
International Bank for Reconstruction and Development which may be supported by
appropriated but unpaid commitments of its member countries, although there is
no assurance that these commitments will be undertaken in the future. However,
assets of the Portfolio may not be invested in obligations of the Inter-American
Development Bank or the Asian Development Bank.
The Investment Adviser invests all of the assets of the Portfolio in
securities which are rated within the highest rating category for short-term
debt obligations by at least two (unless only rated by one) nationally
recognized statistical rating organizations (e.g., Moody's Investors Service,
Inc. ("Moody's"), Standard & Poor's Corporation ("S&P")) and Fitch. Issues that
do not carry a short-term rating but fall within the maturity parameters of the
Portfolio, must carry a long-term debt rating within the two highest debt rating
categories by at least two nationally recognized statistical rating
organizations.
<PAGE>
WS5945
PART B
Cover Page.
Not applicable.
Table of Contents
Page
Investments
Investment Objective and Policies . . . . . 2
Investment Restrictions . . . . . . . . 6
Management
Directors, Trustees and Officers . . . . . 9
Investment Adviser . . . . . . . . . . 12
Administrators. . . . . . . . . . . . 13
Placement Agent. . . . . . . . . . . . 15
Custodian, Transfer and Dividend Disbursing Agent 15
Independent Auditors 15
Net Asset Value; Redemption in Kind . . . . 16
Computation of Performance . . . . . . . 18
Purchases and Redemptions 19
Federal Taxes . . . . . . . . . . . . 20
Description of Shares . . . . . . . . . 21
Portfolio Brokerage Transactions . . . . 23
Bond, Note and Commercial Paper Ratings 24
Additional Information. . . . . . . . . . . . . . . 26
Financial Statements 26
Fund History.
BBH Common Settlement Fund, Inc. ("BBH ComSet") is an open-end
management investment company which was organized as a Maryland corporation on
July 31, 2000. BBH ComSet is a type of mutual fund commonly known as a money
market fund. BBH ComSet is designed to be a cost effective and convenient means
of making substantial investments in money market instruments.
Brown Brothers Harriman & Co. is the investment adviser of the Portfolio
(the "Investment Adviser").
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of BBH ComSet is to achieve as high a level of
current income as is consistent with the preservation of capital and the
maintenance of liquidity. BBH ComSet seeks to achieve its investment objective
by investing all of its assets in the BBH U.S. Money Market Portfolio (the
"Portfolio"), a diversified open-end investment company having the same
investment objective as BBH ComSet. The Portfolio pursues its investment
objective by investing in high quality, short-term money market instruments.
There can be no assurance that BBH ComSet's investment objective will be
achieved.
The following supplements the information contained in Part A
concerning the investment objective, policies and techniques of BBH ComSet and
the Portfolio. Since the investment characteristics of BBH ComSet correspond
directly to those of the Portfolio, the following is a discussion of the various
investments and investment policies of the Portfolio.
Loans of Portfolio Securities
Loans of portfolio securities up to 30% of the total value of the
Portfolio are permitted and may be entered into for not more than one year.
Securities of the Portfolio may be loaned if such loans are secured continuously
by cash or equivalent collateral or by an irrevocable letter of credit in favor
of the Portfolio at least equal at all times to 100% of the market value of the
securities loaned plus accrued income. While such securities are on loan, the
borrower pays the Portfolio any income accruing thereon, and cash collateral may
be invested for the Portfolio, thereby earning additional income. All or any
portion of interest earned on invested collateral may be paid to the borrower.
Loans are subject to termination by the Portfolio in the normal settlement time,
currently three business days after notice, or by the borrower on one day's
notice. Borrowed securities are returned when the loan is terminated. Any
appreciation or depreciation in the market price of the borrowed securities
which occurs during the term of the loan inures to the Portfolio and its
investors. Reasonable finders' and custodial fees may be paid in connection with
a loan. In addition, all facts and circumstances, including the creditworthiness
of the borrowing financial institution, are considered before a loan is made and
no loan is made in excess of one year. There is the risk that a borrowed
security may not be returned to the Portfolio. Securities of the Portfolio are
not loaned to Brown Brothers Harriman & Co. or to any affiliate of BBH ComSet,
the Portfolio or Brown Brothers Harriman & Co.
U.S. Government Securities
Assets of the Portfolio may be invested in securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. These
securities, including those which are guaranteed by federal agencies or
instrumentalities, may or may not be backed by the "full faith and credit" of
the United States. In the case of securities not backed by the full faith and
credit of the United States, it may not be possible to assert a claim against
the United States itself in the event the agency or instrumentality issuing or
guaranteeing the security for ultimate repayment does not meet its commitments.
Securities which are not backed by the full faith and credit of the United
States include, but are not limited to, securities of the Tennessee Valley
Authority, the Federal National Mortgage Association (FNMA), the U.S. Postal
Service and the Resolution Funding Corporation (REFCORP), each of which has a
limited right to borrow from the U.S. Treasury to meet its obligations, and
securities of the Federal Farm Credit System, the Federal Home Loan Banks, the
Federal Home Loan Mortgage Corporation (FHLMC) and the Student Loan Marketing
Association, the obligations of each of which may be satisfied only by the
individual credit of the issuing agency. Securities which are backed by the full
faith and credit of the United States include Treasury bills, Treasury notes,
Treasury bonds and pass through obligations of the Government National Mortgage
Association (GNMA), the Farmers Home Administration and the Export-Import Bank.
There is no percentage limitation with respect to investments in U.S. Government
securities.
Bank Obligations
Assets of the Portfolio may be invested in U.S. dollar-denominated
negotiable certificates of deposit and fixed time deposits of banks, savings and
loan associations and savings banks organized under the laws of the United
States or any state thereof, including obligations of non-U.S. branches of such
banks, or of non-U.S. banks or their U.S. or non-U.S. branches, provided that in
each case, such bank has more than $500 million in total assets, and has an
outstanding short-term debt issue rated within the highest rating category for
short-term debt obligations by at least two (unless only rated by one)
nationally recognized statistical rating organizations (e.g., Moody's and S&P)
or, if unrated, are of comparable quality as determined by or under the
direction of the Portfolio's Board of Trustees. See "Bond, Note and Commercial
Paper Ratings" in this Part B. There is no additional percentage limitation with
respect to investments in negotiable certificates of deposit and fixed time
deposits of U.S. branches of U.S. banks and U.S. branches of non-U.S. banks that
are subject to the same regulation as U.S. banks. Since the Portfolio may
contain U.S. dollar-denominated certificates of deposit, fixed time deposits and
bankers' acceptances that are issued by non-U.S. banks and their non-U.S.
branches, the Portfolio may be subject to additional investment risks with
respect to those securities that are different in some respects from obligations
of U.S. issuers, such as currency exchange control regulations, the possibility
of expropriation, seizure or nationalization of non-U.S. deposits, less
liquidity and more volatility in non-U.S. securities markets and the impact of
political, social or diplomatic developments or the adoption of other foreign
government restrictions which might adversely affect the payment of principal
and interest on securities held by the Portfolio. If it should become necessary,
greater difficulties might be encountered in invoking legal processes abroad
than would be the case in the United States. Issuers of non-U.S. bank
obligations may be subject to less stringent or different regulations than are
U.S. bank issuers, there may be less publicly available information about a
non-U.S. issuer, and non-U.S. issuers generally are not subject to uniform
accounting and financial reporting standards, practices and requirements
comparable to those applicable to U.S. issuers. Income earned or received by the
Portfolio from sources within countries other than the United States may be
reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States, however, may reduce
or eliminate such taxes. All such taxes paid by the Portfolio would reduce its
net income available for distribution to investors (i.e., BBH ComSet and other
investors in the Portfolio); however, the Investment Adviser would consider
available yields, net of any required taxes, in selecting securities of non-U.S.
issuers. While early withdrawals are not contemplated, fixed time deposits are
not readily marketable and may be subject to early withdrawal penalties, which
may vary. Assets of the Portfolio are not invested in obligations of Brown
Brothers Harriman & Co., or the Placement Agent, or in the obligations of the
affiliates of any such organization. Assets of the Portfolio are also not
invested in fixed time deposits with a maturity of over seven calendar days, or
in fixed time deposits with a maturity of from two business days to seven
calendar days if more than 10% of the Portfolio's net assets would be invested
in such deposits.
Commercial Paper
Assets of the Portfolio may be invested in commercial paper including
variable rate demand master notes issued by U.S. corporations or by non-U.S.
corporations which are direct parents or subsidiaries of U.S. corporations.
Master notes are demand obligations that permit the investment of fluctuating
amounts at varying market rates of interest pursuant to arrangements between the
issuer and a U.S. commercial bank acting as agent for the payees of such notes.
Master notes are callable on demand, but are not marketable to third parties.
Consequently, the right to redeem such notes depends on the borrower's ability
to pay on demand. At the date of investment, commercial paper must be rated
within the highest rating category for short-term debt obligations by at least
two (unless only rated by one) nationally recognized statistical rating
organizations (e.g., Moody's and S&P) or, if unrated, are of comparable quality
as determined by or under the direction of the Portfolio's Board of Trustees.
Any commercial paper issued by a non-U.S. corporation must be U.S.
dollar-denominated and not subject to non-U.S. withholding tax at the time of
purchase. Aggregate investments in non-U.S. commercial paper of non-U.S. issuers
cannot exceed 10% of the Portfolio's net assets. Since the Portfolio may contain
commercial paper issued by non-U.S. corporations, it may be subject to
additional investment risks with respect to those securities that are different
in some respects from obligations of U.S. issuers, such as currency exchange
control regulations, the possibility of expropriation, seizure or
nationalization of non-U.S. deposits, less liquidity and more volatility in
non-U.S. securities markets and the impact of political, social or diplomatic
developments or the adoption of other foreign government restrictions which
might adversely affect the payment of principal and interest on securities held
by the Portfolio. If it should become necessary, greater difficulties might be
encountered in invoking legal processes abroad than would be the case in the
United States. There may be less publicly available information about a non-U.S.
issuer, and non-U.S. issuers generally are not subject to uniform accounting and
financial reporting standards, practices and requirements comparable to those
applicable to U.S. issuers.
Repurchase Agreements
A repurchase agreement is an agreement in which the seller (the "Lender")
of a security agrees to repurchase from the Portfolio the security sold at a
mutually agreed upon time and price. As such, it is viewed as the lending of
money to the Lender. The resale price normally is in excess of the purchase
price, reflecting an agreed upon interest rate. The rate is effective for the
period of time assets of the Portfolio are invested in the agreement and is not
related to the coupon rate on the underlying security. The period of these
repurchase agreements is usually short, from overnight to one week, and at no
time are assets of the Portfolio invested in a repurchase agreement with a
maturity of more than one year. The securities which are subject to repurchase
agreements, however, may have maturity dates in excess of one year from the
effective date of the repurchase agreement. The Portfolio always receives as
collateral eligible securities for the Portfolio to purchase. Collateral is
marked to the market daily and has a market value including accrued interest at
least equal to 100% of the dollar amount invested on behalf of the Portfolio in
each agreement along with accrued interest. Payment for such securities is made
for the Portfolio only upon physical delivery or evidence of book entry transfer
to the account of Brown Brothers Harriman & Co, the Portfolio's Custodian. If
the Lender defaults, the Portfolio might incur a loss if the value of the
collateral securing the repurchase agreement declines and might incur
disposition costs in connection with liquidating the collateral. In addition, if
bankruptcy proceedings are commenced with respect to the Lender, realization
upon the collateral on behalf of the Portfolio may be delayed or limited in
certain circumstances. A repurchase agreement with more than seven days to
maturity may not be entered into for the Portfolio if, as a result, more than
10% of the Portfolio's net assets would be invested in such repurchase agreement
together with any other investment for which market quotations are not readily
available.
Reverse Repurchase Agreements
Reverse repurchase agreements may be entered into only with a "primary
dealer" (as designated by the Federal Reserve Bank of New York) in U.S.
Government securities. This is an agreement in which the Portfolio agrees to
repurchase securities sold by it at a mutually agreed upon time and price. As
such, it is viewed as the borrowing of money for the Portfolio. Proceeds of
borrowings under reverse repurchase agreements are invested for the Portfolio.
This is the speculative factor known as "leverage". If interest rates rise
during the term of a reverse repurchase agreement utilized for leverage, the
value of the securities to be repurchased for the Portfolio as well as the value
of securities purchased with the proceeds will decline. In these circumstances,
the Portfolio's entering into reverse repurchase agreements may have a negative
impact on the ability to maintain BBH ComSet's net asset value of $1.00 per
share. Proceeds of a reverse repurchase transaction are not invested for a
period which exceeds the duration of the reverse repurchase agreement. A reverse
repurchase agreement is not entered into for the Portfolio if, as a result, more
than one-third of the market value of the Portfolio's total assets, less
liabilities other than the obligations created by reverse repurchase agreements,
is engaged in reverse repurchase agreements. In the event that such agreements
exceed, in the aggregate, one-third of such market value, the amount of the
Portfolio's obligations created by reverse repurchase agreements is reduced
within three days thereafter (not including weekends and holidays) or such
longer period as the Securities and Exchange Commission may prescribe, to an
extent that such obligations do not exceed, in the aggregate, one-third of the
market value of the Portfolio's assets, as defined above. A segregated account
with the Custodian is established and maintained for the Portfolio with liquid
assets in an amount at least equal to the Portfolio's purchase obligations under
its reverse repurchase agreements. Such a segregated account consists of liquid
high grade debt securities marked to the market daily, with additional liquid
assets added when necessary to insure that at all times the value of such
account is equal to the purchase obligations.
When-Issued and Delayed Delivery Securities
Securities may be purchased for the Portfolio on a when-issued or delayed
delivery basis. For example, delivery and payment may take place a month or more
after the date of the transaction. The purchase price and the interest rate
payable on the securities are fixed on the transaction date. The securities so
purchased are subject to market fluctuation and no interest accrues to the
Portfolio until delivery and payment take place. At the time the commitment to
purchase securities for the Portfolio on a when-issued or delayed delivery basis
is made, the transaction is recorded and thereafter the value of such securities
is reflected each day in determining the Portfolio's net asset value. At the
time of its acquisition, a when-issued security may be valued at less than the
purchase price. Commitments for such when-issued securities are made only when
there is an intention of actually acquiring the securities. To facilitate such
acquisitions, a segregated account with the Custodian is maintained for the
Portfolio with liquid assets in an amount at least equal to such commitments.
Such a segregated account consists of liquid high grade debt securities marked
to the market daily, with additional liquid assets added when necessary to
insure that at all times the value of such account is equal to the commitments.
On delivery dates for such transactions, such obligations are met from
maturities or sales of the securities held in the segregated account and/or from
cash flow. If the right to acquire a when-issued security is disposed of prior
to its acquisition, the Portfolio could, as with the disposition of any other
portfolio obligation, incur a gain or loss due to market fluctuation.
When-issued commitments for the Portfolio may not be entered into if such
commitments exceed in the aggregate 15% of the market value of the Portfolio's
total assets, less liabilities other than the obligations created by when-issued
commitments.
Other Obligations
Assets of the Portfolio may be invested in bonds and asset-backed
securities with maturities not exceeding thirteen months, issued by U.S.
corporations which at the date of investment are rated within the highest
short-term rating category for such obligations or the two highest long-term
rating categories by at least two (unless only rated by one) nationally
recognized statistical rating organizations (e.g., Moody's and S&P) or, if
unrated, are of comparable quality as determined by or under the direction of
the Portfolio's Board of Trustees.
Assets of the Portfolio may also be invested in obligations of the
International Bank for Reconstruction and Development which may be supported by
appropriated but unpaid commitments of its member countries, although there is
no assurance that these commitments will be undertaken in the future. However,
assets of the Portfolio may not be invested in obligations of the Inter-American
Development Bank or the Asian Development Bank.
INVESTMENT RESTRICTIONS
BBH ComSet and the Portfolio are operated under the following
investment restrictions which are deemed fundamental policies and may be changed
only with the approval of the holders of a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of BBH ComSet or the Portfolio, as the
case may be (see "Additional Information"). Since the investment restrictions of
BBH ComSet correspond directly to those of the Portfolio, the following is a
discussion of the various investment restrictions of the Portfolio.
As a fundamental policy, money is not borrowed by the Portfolio in an
amount in excess of 10% of its assets. It is intended that money will be
borrowed only from banks and only either to accommodate requests for the
withdrawal of part or all of an interest while effecting an orderly liquidation
of portfolio securities or to maintain liquidity in the event of an
unanticipated failure to complete a portfolio security transaction or other
similar situations. Securities are not purchased for the Portfolio at any time
at which the amount of its borrowings exceed 5% of its net assets.
Except that BBH ComSet may invest all of its assets in an open-end
investment company with substantially the same investment objective, policies
and restrictions as BBH ComSet, neither the Portfolio nor BBH ComSet, may:
(1) purchase securities which may not be resold to the public without
registration under the Securities Act of 1933, as amended;
(2) enter into repurchase agreements with more than seven days to
maturity if, as a result thereof, more than 10% of the market value of its net
assets would be invested in such repurchase agreements together with any other
investment for which market quotations are not readily available;
(3) enter into reverse repurchase agreements which, including any
borrowings under Investment Restriction No. 4, exceed, in the aggregate,
one-third of the market value of its total assets, less liabilities other than
obligations created by reverse repurchase agreements. In the event that such
agreements exceed, in the aggregate, one-third of such market value, it will,
within three days thereafter (not including weekends and holidays) or such
longer period as the Securities and Exchange Commission may prescribe, reduce
the amount of the obligations created by reverse repurchase agreements to an
extent that such obligations will not exceed, in the aggregate, one-third of the
market value of its assets;
(4) borrow money, except from banks for extraordinary or emergency
purposes and then only in amounts not to exceed 10% of the value of its total
assets, taken at cost, at the time of such borrowing; mortgage, pledge or
hypothecate any assets except in connection with any such borrowing and in
amounts not to exceed 10% of the value of its net assets at the time of such
borrowing. Neither the Portfolio nor BBH ComSet, as the case may be, will
purchase securities while borrowings exceed 5% of its total assets. This
borrowing provision is included to facilitate the orderly sale of portfolio
securities, for example, in the event of abnormally heavy redemption requests,
and is not for investment purposes and does not apply to reverse repurchase
agreements (see "Reverse Repurchase Agreements");
(5) enter into when-issued commitments exceeding in the aggregate 15%
of the market value of its total assets, less liabilities other than obligations
created by when-issued commitments;
(6) purchase the securities or other obligations of issuers conducting
their principal business activity in the same industry if, immediately after
such purchase, the value of such investments in such industry would exceed 25%
of the value of its total assets. For purposes of industry concentration, there
is no percentage limitation with respect to investments in U.S. Government
securities and negotiable certificates of deposit, fixed time deposits and
bankers' acceptances of U.S. branches of U.S. banks and U.S. branches of
non-U.S. banks that are subject to the same regulation as U.S. banks;
(7) purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of its total assets
would be invested in securities or other obligations or any one such issuer.
This limitation does not apply to issues of the U.S. Government, its agencies or
instrumentalities;
(8) make loans, except through the purchase or holding of debt
obligations, repurchase agreements or loans of portfolio securities in
accordance with its investment objective and policies (see "Investment Objective
and Policies");
(9) purchase or sell puts, calls, straddles, spreads, or any
combinations thereof; real estate; commodities; commodity contracts or interests
in oil, gas or mineral exploration or development programs. However, bonds or
commercial paper issued by companies which invest in real estate or interests
therein including real estate investment trusts may be purchased;
(10) purchase securities on margin, make short sales of securities or
maintain a short position, provided that this restriction is not deemed to be
applicable to the purchase or sale of when-issued securities or of securities
for delivery at a future date;
(11) invest in fixed time deposits with a duration of over seven
calendar days, or in fixed time deposits with a duration of from two business
days to seven calendar days if more than 10% of its total assets would be
invested in such deposits;
(12) acquire securities of other investment companies;
(13) act as an underwriter of securities; or
(14) issue any senior security (as that term is defined in the 1940
Act) if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder.
Except with respect to Investment Restriction No. 3, there will be no
violation of any investment restriction if that restriction is complied with at
the time the relevant action is taken notwithstanding a later change in market
value of an investment, in net or total assets, in the securities rating of the
investment, or any other later change.
Non-Fundamental Restrictions. The Portfolio or BBH ComSet, may not as a
matter of operating policy (except that BBH ComSet may invest all of its assets
in an open-end investment company with substantially the same investment
objective, policies and restrictions as BBH ComSet): (i) purchase more than 10%
of all outstanding debt obligations of any one issuer (other than securities
issued by the U.S. government, its agencies instrumentalities); or (ii) invest
more than 10% of its net assets (taken at the greater of cost or market value)
in restricted securities. These policies are not fundamental and may be changed
without shareholder or investor approval.
Percentage and Rating Restrictions. If a percentage or rating
restriction on investment or utilization of assets set forth above or referred
to in Part A is adhered to at the time an investment is made or assets are so
utilized, a later change in percentage resulting from changes in the value of
the portfolio securities or a later change in the rating of a portfolio security
is not considered a violation of policy. If BBH ComSet's and the Portfolio's
respective investment restrictions relating to any particular investment
practice or policy are not consistent, the Portfolio has agreed with BBH ComSet
that the Portfolio will adhere to the more restrictive limitation.
BBH ComSet is classified as "diversified" under the 1940 Act, which
means that at least 75% of its total assets is represented by cash; securities
issued by the U.S. Government, its agencies or instrumentalities; and other
securities limited in respect of any one issuer to an amount no greater than 5%
of BBH ComSet's total assets (other than securities issued by the U.S.
Government, its agencies or instrumentalities).
DIRECTORS, TRUSTEES AND OFFICERS
BBH ComSet's Directors, in addition to supervising the actions of BBH
ComSet's Administrator and Placement Agent, as set forth below, decide upon
matters of general policy with respect to BBH ComSet. The Portfolio's Trustees,
in addition to supervising the actions of the Portfolio's Investment Adviser and
Administrator, as set forth below, decide upon matters of general policy with
respect to the Portfolio.
Because of the services rendered to the Portfolio by the Investment
Adviser and to BBH ComSet and the Portfolio by their respective Administrators,
BBH ComSet and the Portfolio require no employees, and their respective
officers, other than the Chairman, receive no compensation from BBH ComSet or
the Portfolio.
The Directors, Trustees and executive officers of BBH ComSet and the
Portfolio, their principal occupations during the past five years (although
their titles may have varied during the period) and business addresses are:
DIRECTORS OF BBH COMSET AND TRUSTEES OF THE PORTFOLIO
J.V. SHIELDS, JR.* (aged 62) - Chairman of the Board and Director
(since August 2000); Trustee of the Portfolio (since October 1999); Director of
The 59 Wall Street Fund, Inc.; Trustee of the BBH Portfolios(1) (since October
1999); Managing Director, Chairman and Chief Executive Officer of Shields &
Company; Chairman of Capital Management Associates, Inc.; Director of Flowers
Industries, Inc.(2). Vice Chairman and Trustee of New York Racing Association.
His business address is Shields & Company, 140 Broadway, New York, NY 10005.
EUGENE P. BEARD (aged 65)** - Director (since August 2000); Trustee of
the Portfolio (since October 1999); Director of The 59 Wall Street Fund, Inc.;
Trustee of the BBH Portfolios (since October 1999); Executive Vice President -
Finance and Operations of The Interpublic Group of Companies. His business
address is The Interpublic Group of Companies, Inc., 1271 Avenue of the
Americas, New York, NY 10020.
DAVID P. FELDMAN (aged 60)** - Director (since August 2000); Trustee of
the Portfolio (since October 1999); Director of The 59 Wall Street Fund, Inc.;
Trustee of the BBH Portfolios (since October 1999); Retired; Vice President and
Investment Manager of AT&T Investment Management Corporation (prior to October
1997); Director of Dreyfus Mutual Funds, Jeffrey Co. and Heitman Financial. His
business address is 3 Tall Oaks Drive, Warren, NJ 07059.
ALAN G. LOWY (aged 61)** - Director (since August 2000); Trustee of the
Portfolio (since October 1999); Director of The 59 Wall Street Fund, Inc.;
Trustee of the BBH Portfolios (since October 1999); Private Investor; Secretary
of the Los Angeles County Board of Investments (prior to March 1995). His
business address is 4111 Clear Valley Drive, Encino, CA 91436.
ARTHUR D. MILTENBERGER (aged 61)** - Director (since August 2000);
Trustee of the Portfolio (since October 1999); Director of The 59 Wall Street
Fund, Inc.; Trustee of the BBH Portfolios (since October 1999); Retired,
Executive Vice President and Chief Financial Officer of Richard K. Mellon and
Sons (prior to June 1998); Treasurer of Richard King Mellon Foundation (prior to
June 1998); Vice President of the Richard King Mellon Foundation; Trustee, R.K.
Mellon Family Trusts; General Partner, Mellon Family Investment Company IV, V
and VI; Director of Aerostructures Corporation (since 1996) (2). His business
address is Richard K. Mellon and Sons, P.O. Box RKM, Ligonier, PA 15658.
RICHARD L. CARPENTER (aged 67)** - Director (since August 2000);
Trustee of the Portfolio; Trustee of the BBH Portfolios; Trustee of Dow Jones
Islamic Market Index Portfolio (since March 1999); Director of The 59 Wall
Street Fund, Inc. (since October 1999); Retired; Director of Investments,
Pennsylvania Public School Employees' Retirement System (prior to December
1997). His business address is 12664 Lazy Acres Court, Nevada City, CA 95959.
CLIFFORD A. CLARK (aged 70)** - Director (since August 2000); Trustee
of the Portfolio; Trustee of the BBH Porfolios; Trustee of Dow Jones Islamic
Market Index Portfolio (since March 1999); Director of The 59 Wall Street Fund,
Inc. (since October 1999); Retired. His business address is 42 Clowes Drive,
Falmouth, MA 02540.
DAVID M. SEITZMAN (aged 71)** - Director (since August 2000); Trustee
of the Portfolio; Trustee of the BBH Porfolios; Director of The 59 Wall Street
Fund, Inc. (since October 1999); Physician, Private Practice. His business
address is 7117 Nevis Road, Bethesda, MD 20817.
J. ANGUS IVORY (aged 68) - Director (since August 2000); Trustee of the
Portfolio (since October 1999); Trustee of the BBH Portfolios (since October
1999); Director of The 59 Wall Street Fund, Inc. (since October 1999); Trustee
of Dow Jones Islamic Market Index Portfolio (since March 1999); Retired;
Director of Brown Brothers Harriman Ltd., subsidiary of Brown Brothers Harriman
& Co.; Director of Old Daily Saddlery; Advisor, RAF Central Fund; Committee
Member, St. Thomas Hospital Pain Clinic (since 1999).
OFFICERS OF BBH COMSET AND THE PORTFOLIO
PHILIP W. COOLIDGE (aged 48) - President (since August 2000); President
of the Portfolio and the BBH Portfolios; Chief Executive Officer and President
of Signature Financial Group, Inc. ("SFG"), 59 Wall Street Distributors, Inc.
("59 Wall Street Distributors") and 59 Wall Street Administrators, Inc. ("59
Wall Street Administrators").
LINWOOD C. DOWNS (aged 38) - Treasurer (since August 2000); Treasurer
of the Portfolio and the BBH Portfolios; Senior Vice President and Treasurer of
SFG; and Treasurer of 59 Wall Street Distributors and 59 Wall Street
Administrators.
MOLLY S. MUGLER (aged 48) - Secretary (since August 2000); Secretary of
the Portfolio and the BBH Portfolios; Legal Counsel and Assistant Secretary of
SFG; and Secretary of 59 Wall Street Distributors and 59 Wall Street
Administrators.
SUSAN JAKUBOSKI (aged 36) - Assistant Treasurer (since August 2000);
Assistant Treasurer and Assistant Secretary of the Portfolio and the BBH
Portfolios; Assistant Secretary, Assistant Treasurer and Vice President of
Signature Financial Group (Cayman) Limited; and Assistant Treasurer of 59 Wall
Street Administrators and 59 Wall Street Distributors.
CHRISTINE D. DORSEY (aged 29) - Assistant Secretary (since August
2000); Assistant Secretary of the Portfolio and the Portfolios; Vice President
of SFG (since January 1996); Paralegal and Compliance Officer, various financial
companies (July 1992 to January 1996).
-------------------------
* Mr. Shields is an "interested person" of BBH ComSet and the Portfolio because
of his affiliation with a registered broker-dealer.
** These Directors or Trustees are members of the Audit Committee of BBH ComSet
or the Portfolio, as the case may be.
(1) The BBH Portfolios consist of the following active investment
companies: BBH U.S. Money Market Portfolio, BBH International Equity
Portfolio, BBH U.S. Equity Portfolio, BBH European Equity Portfolio,
BBH Pacific Basin Equity Portfolio, BBH High Yield Fixed Income
Portfolio, BBH Broad Market Fixed Income Portfolio and BBH Global
Equity Portfolio and the following inactive investment companies: BBH
U.S. Balanced Growth Portfolio and BBH U.S. Intermediate Tax-Exempt
Bond Portfolio.
(2) Shields & Company, Capital Management Associates, Inc. and Flowers
Industries, Inc., with which Mr. Shields is associated, are a
registered broker-dealer and a member of the New York Stock Exchange, a
registered investment adviser, and a diversified food company,
respectively.
(3) Richard K. Mellon and Sons, Richard King Mellon Foundation, R.K. Mellon
Family Trusts, Mellon Family Investment Company IV, V and VI and
Aerostructures Corporation, with which Mr. Miltenberger is or has been
associated, are a private foundation, a private foundation, a trust, an
investment company and an aircraft manufacturer, respectively.
Each Director and officer of BBH ComSet listed above holds the
equivalent position with The 59 Wall Street Fund, Inc. and The 59 Wall Street
Trust. The address of each officer of BBH ComSet is 21 Milk Street, Boston,
Massachusetts 02109. Messrs. Coolidge and Downs, and Mss. Jakuboski, Mugler and
Dorsey also hold similar positions with other investment companies for which
affiliates of 59 Wall Street Distributors serve as the principal underwriter.
Except for Mr. Shields, no Director is an "interested person" of BBH
ComSet or the Portfolio as that term is defined in the 1940 Act.
<PAGE>
The Directors of BBH ComSet receive no compensation for their services.
By virtue of the responsibilities assumed by Brown Brothers Harriman &
Co. under the Investment Advisory Agreement with the Portfolio and the
Administration Agreement with BBH ComSet, and by Brown Brothers Harriman Trust
Company LLC under the Administration Agreement with the Portfolio (see
"Investment Adviser" and "Administrators"), neither BBH ComSet nor the Portfolio
requires employees other than its officers, and none of its officers devote full
time to the affairs of BBH ComSet or the Portfolio, as the case may be, or,
other than the Chairman, receive any compensation from BBH ComSet or the
Portfolio.
As of August 16, 2000, Brown Brothers Harriman Trust Company, LLC owned
100% of the outstanding shares of BBH ComSet. So long as Brown Brothers Harriman
Trust Company, LLC controls BBH ComSet, it may take actions without the approval
of any other shareholder in BBH ComSet.
INVESTMENT ADVISER
Under its Investment Advisory Agreement with the Portfolio, subject to
the general supervision of the Portfolio's Trustees and in conformance with the
stated policies of the Portfolio, Brown Brothers Harriman & Co. provides
investment advice and portfolio management services to the Portfolio. In this
regard, it is the responsibility of Brown Brothers Harriman & Co. to make the
day-to-day investment decisions for the Portfolio, to place the purchase and
sale orders for portfolio transactions and to manage, generally, the Portfolio's
investments.
The Investment Advisory Agreement between Brown Brothers Harriman & Co.
and the Portfolio is dated December 15, 1993, as amended and restated July 1,
2000, and remains in effect for two years from such date and thereafter, but
only as long as the agreement is specifically approved at least annually (i) by
a vote of the holders of a "majority of the outstanding voting securities" (as
defined in the 1940 Act) of the Portfolio, or by the Portfolio's Trustees, and
(ii) by a vote of a majority of the Trustees of the Portfolio who are not
parties to the Investment Advisory Agreement or "interested persons" (as defined
in the 1940 Act) of the Portfolio ("Independent Trustees"), cast in person at a
meeting called for the purpose of voting on such approval. The Investment
Advisory Agreement was most recently approved by the Independent Trustees on May
9, 2000. The Investment Advisory Agreement terminates automatically if assigned
and is terminable at any time without penalty by a vote of a majority of the
Trustees of the Portfolio or by a vote of the holders of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Portfolio on
60 days' written notice to Brown Brothers Harriman & Co. and by Brown Brothers
Harriman & Co. on 90 days' written notice to the Portfolio (see "Additional
Information").
With respect to the Portfolio, the investment advisory fee paid to the
Investment Adviser is calculated daily and paid monthly at an annual rate equal
to 0.10% of the Portfolio's average daily net assets. Prior to July 1, 2000, the
investment advisory fee paid to the Investment Adviser was calculated daily and
paid monthly at an annual rate equal to 0.15% of the Portfolio's average daily
net assets. For the fiscal years ended June 30, 1999, 1998 and 1997, the
Portfolio incurred $1,593,123, $1,466,761 and $1,274,559, respectively, for
advisory services.
The investment advisory services of Brown Brothers Harriman & Co. to
the Portfolio are not exclusive under the terms of the Investment Advisory
Agreement. Brown Brothers Harriman & Co. is free to and does render investment
advisory services to others, including other registered investment companies.
Pursuant to license agreements between Brown Brothers Harriman & Co. and
each of 59 Wall Street Administrators and 59 Wall Street Distributors (each a
"Licensee"), dated June 22, 1993 and June 8, 1990, respectively, each Licensee
may continue to use in its name "59 Wall Street", the current and historic
address of Brown Brothers Harriman & Co., only if Brown Brothers Harriman & Co.
does not terminate the respective license agreement, which would require the
Licensee to change its name to eliminate all reference to "59 Wall Street".
Pursuant to a license agreement between each of the Portfolio and BBH
ComSet and Brown Brothers Harriman & Co. dated May 9, 2000 and August 15, 2000,
respectively, each of the Portfolio and BBH ComSet may continue to use in its
name "BBH". Each agreement may be terminated by Brown Brothers Harriman & Co. at
any time upon written notice to the Portfolio or BBH ComSet, as the case may be,
upon the expiration or earlier termination of any investment advisory agreement
between the Portfolio and Brown Brothers Harriman & Co. Termination of the
agreement would require each of the Portfolio and BBH ComSet to change its name
to eliminate all reference to "BBH".
ADMINISTRATORS
Brown Brothers Harriman Trust Company, LLC acts as Administrator of BBH
ComSet and the Portfolio. Brown Brothers Harriman Trust Company, LLC is a
wholly-owned subsidiary of Brown Brothers Harriman & Co.
In its capacity as Administrator of BBH ComSet, Brown Brothers Harriman
Trust Company, LLC administers all aspects of BBH ComSet's operations subject to
the supervision of BBH ComSet's Directors except as set forth below under
"Placement Agent". In connection with its responsibilities as Administrator and
at its own expense, Brown Brothers Harriman Trust Company, LLC (i) provides BBH
ComSet with the services of persons competent to perform such supervisory,
administrative and clerical functions as are necessary in order to provide
effective administration of BBH ComSet; (ii) oversees the performance of
administrative and professional services to BBH ComSet by others, including BBH
ComSet's Transfer and Dividend Disbursing Agent; (iii) provides BBH ComSet with
adequate office space and communications and other facilities; and (iv) prepares
and/or arranges for the preparation, but does not pay for, the periodic updating
of BBH ComSet's registration statement, the printing of such documents for the
purpose of filings with the Securities and Exchange Commission and state
securities administrators, and the preparation of tax returns for BBH ComSet and
reports to shareholders and the Securities and Exchange Commission.
For the services rendered to BBH ComSet and related expenses borne by
Brown Brothers Harriman Trust Company, LLC, as Administrator of BBH ComSet,
Brown Brothers Harriman Trust Company, LLC receives from BBH ComSet an annual
fee, computed daily and payable monthly, equal to 0.01% of BBH ComSet's average
daily net assets.
Brown Brothers Harriman Trust Company, LLC in its capacity as
Administrator of the Portfolio, administers all aspects of the Portfolio's
operations subject to the supervision of the Portfolio's Trustees except as set
forth above under "Investment Adviser". In connection with its responsibilities
as Administrator for the Portfolio and at its own expense, Brown Brothers
Harriman Trust Company, LLC (i) provides the Portfolio with the services of
persons competent to perform such supervisory, administrative and clerical
functions as are necessary in order to provide effective administration of the
Portfolio, including the maintenance of certain books and records, receiving and
processing requests for increases and decreases in the beneficial interests in
the Portfolio, notification to the Investment Adviser of available funds for
investment, reconciliation of account information and balances between the
Custodian and the Investment Adviser, and processing, investigating and
responding to investor inquiries; (ii) oversees the performance of
administrative and professional services to the Portfolio by others, including
the Custodian; (iii) provides the Portfolio with adequate office space and
communications and other facilities; and (iv) prepares and/or arranges for the
preparation, but does not pay for, the periodic updating of the Portfolio's
registration statement for filing with the Securities and Exchange Commission,
and the preparation of tax returns for the Portfolio and reports to investors
and the Securities and Exchange Commission.
For the services rendered to the Portfolio and related expenses borne
by Brown Brothers Harriman Trust Company, LLC as Administrator of the Portfolio,
Brown Brothers Harriman Trust Company, LLC receives from the Portfolio an annual
fee, computed daily and payable monthly, equal to 0.035% of the Portfolio's
average daily net assets. For the fiscal years ended June 30, 1999, 1998 and
1997, the Portfolio incurred $371,729, $342,244 and $297,397, respectively, for
administrative services.
The Administration Agreements between BBH ComSet and Brown Brothers
Harriman Trust Company, LLC (dated August 15, 2000) and between the Portfolio
and Brown Brothers Harriman Trust Company, LLC (dated March 1, 1999) will remain
in effect for two years from such respective date and thereafter, but only so
long as each such agreement is specifically approved at least annually in the
same manner as the Portfolio's Investment Advisory Agreement (see "Investment
Adviser"). The Independent Directors last approved BBH ComSet's Administration
Agreement on August 15, 2000. The Independent Trustees last approved the
Portfolio's Administration Agreement on May 9, 2000. Each agreement will
terminate automatically if assigned by either party thereto and is terminable
with respect to BBH ComSet or the Portfolio at any time without penalty by a
vote of a majority of the Directors of BBH ComSet or the Trustees of the
Portfolio, as the case may be, or by a vote of the holders of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of BBH ComSet or the
Portfolio, as the case may be. BBH ComSet's Administration Agreement is
terminable by the Directors of BBH ComSet or shareholders of BBH ComSet on 60
days' written notice to Brown Brothers Harriman Trust Company, LLC. The
Portfolio's Administration Agreement is terminable by the Trustees of the
Portfolio or by BBH ComSet and other investors in the Portfolio on 60 days'
written notice to Brown Brothers Harriman Trust Company, LLC. Each agreement is
terminable by the respective Administrator on 90 days' written notice to BBH
ComSet or the Portfolio, as the case may be.
Pursuant to a Subadministrative Services Agreement with Brown Brothers
Harriman Trust Company, LLC, 59 Wall Street Administrators performs such
subadministrative duties for BBH ComSet as are from time to time agreed upon by
the parties. The offices of 59 Wall Street Administrators are located at 21 Milk
Street, Boston, Massachusetts 02109. 59 Wall Street Administrators is a
wholly-owned subsidiary of SFG. SFG is not affiliated with Brown Brothers
Harriman Trust Company, LLC. 59 Wall Street Administrators' subadministrative
duties may include providing equipment and clerical personnel necessary for
maintaining the organization of BBH ComSet, participation in the preparation of
documents required for compliance by BBH ComSet with applicable laws and
regulations, preparation of certain documents in connection with meetings of
Directors and shareholders of BBH ComSet, and other functions that would
otherwise be performed by the Administrator as set forth above. For performing
such subadministrative services, 59 Wall Street Administrators receives such
compensation from Brown Brothers Harriman Trust Company, LLC as is from time to
time agreed upon, but not in excess of the amount paid to the Administrator from
BBH ComSet.
Pursuant to a Subadministrative Services Agreement with Brown Brothers
Harriman Trust Company, LLC, 59 Wall Street Administrators, Inc. ("59 Wall
Street Administrators") performs such subadministrative duties for the Portfolio
as are from time to time agreed upon by the parties. 59 Wall Street
Administrator's subadministrative duties may include providing equipment and
clerical personnel necessary for maintaining the organization of the Portfolio,
participation in the preparation of documents required for compliance by the
Portfolio with applicable laws and regulations, preparation of certain documents
in connection with meetings of Trustees of and investors in the Portfolio, and
other functions that would otherwise be performed by the Administrator of the
Portfolio as set forth above. For performing such subadministrative services, 59
Wall Street Administrators receives such compensation from Brown Brothers
Harriman Trust Company, LLC as is from time to time agreed upon, but not in
excess of the amount paid to the Administrator from the Portfolio.
PLACEMENT AGENT
BBH ComSet has not retained the services of a principal underwriter or
distributor, since interests in BBH ComSet are offered solely in private
placement transactions. 59 Wall Street Distributors, Inc. acting as agent for
BBH ComSet, serves as the placement agent of shares of BBH ComSet. 59 Wall
Street Distributors receives no compensation for serving as placement agent.
EXPENSE PAYMENT AGREEMENT
Under an expense payment agreement dated August 15, 2000, Brown
Brothers Harriman Trust Company, LLC pays the expenses of BBH ComSet, other than
fees paid to Brown Brothers Harriman Trust Company, LLC under BBH ComSet's
Administration Agreement and other than expenses relating to the organization of
BBH ComSet. In return, Brown Brothers Harriman Trust Company, LLC receives a fee
from BBH ComSet such that after such payment the aggregate expenses of BBH
ComSet do not exceed an agreed upon annual rate, currently 0.16% of the average
daily net assets of BBH ComSet. Such fees are computed daily and paid monthly.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, is the Custodian for BBH ComSet and the Portfolio.
As Custodian for BBH ComSet, it is responsible for holding BBH ComSet's
assets (i.e., cash and BBH ComSet's interest in the Portfolio) pursuant to a
custodian agreement with BBH ComSet. Cash is held for BBH ComSet in demand
deposit accounts at the Custodian. Subject to the supervision of the
Administrator of BBH ComSet, the Custodian maintains the accounting records for
BBH ComSet and each day computes the net asset value and net income per share of
BBH ComSet.
As Custodian for the Portfolio, it is responsible for maintaining books
and records of portfolio transactions and holding the Portfolio's securities and
cash pursuant to a custodian agreement with the Portfolio. Cash is held for the
Portfolio in demand deposit accounts at the Custodian. Subject to the
supervision of the Administrator of the Portfolio, the Custodian maintains the
accounting and portfolio transaction records for the Portfolio and each day
computes the net asset value and net income of the Portfolio.
Forum Shareholder Services, LLC, Two Portland Square, Portland, Maine
04101 is the Transfer and Dividend Disbursing Agent for BBH ComSet. The Transfer
and Dividend Disbursing Agent is responsible for maintaining the books and
records detailing ownership of BBH ComSet's shares.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, Boston, Massachusetts are the independent auditors
for BBH ComSet and Portfolio.
CODE OF ETHICS
BBH ComSet, the Portfolio, the Adviser and the Placement Agent each have
adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act. Each code of
ethics permits personnel subject to such code of ethics to invest in securities,
including securities that may be purchased or held by the Portfolio. However,
the codes of ethics contain provisions and requirements designed to identify and
address certain conflicts of interest between personal investment activities and
the interests of the Portfolio. Of course, there can be no assurance that the
codes of ethics will be effective in identifying and addressing all conflicts of
interest relating to personal securities transactions. The code of ethics of BBH
ComSet, the Portfolio, the Adviser and the Placement Agent are on file with and
are available from the SEC.
NET ASSET VALUE
The net asset value of each of BBH ComSet's shares is determined each
day the New York Stock Exchange is open for regular trading and New York banks
are open for business. (As of the date of this Statement of Additional
Information, such Exchange and banks are so open every weekday except for the
following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day, Thanksgiving Day and Christmas.) This determination of net asset
value of each share of BBH ComSet is made once during each such day as of the
close of regular trading on such Exchange by subtracting from the value of BBH
ComSet's total assets (i.e., the value of its investment in the Portfolio and
other assets) the amount of its liabilities, including expenses payable or
accrued, and dividing the difference by the number of shares of BBH ComSet
outstanding at the time the determination is made.
The value of the Portfolio's net assets (i.e., the value of its
securities and other assets less its liabilities, including expenses payable or
accrued) is determined at the same time and on the same days as the net asset
value per share of BBH ComSet is determined. The determination of the value of
BBH ComSet's investment in the Portfolio is made by subtracting from the value
of the total assets of the Portfolio the amount of the Portfolio's liabilities
and multiplying the difference by the percentage, effective for that day, which
represents BBH ComSet's share of the aggregate beneficial interests in the
Portfolio. The value of BBH ComSet's investment in the Portfolio is determined
once daily at 4:00 P.M., New York time on each day the New York Stock Exchange
is open for regular trading and New York banks are open for business.
The Portfolio's assets are valued by using the amortized cost method of
valuation. This method involves valuing a security at its cost at the time of
purchase and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. The market value of the securities held by
the Portfolio fluctuates on the basis of the creditworthiness of the issuers of
such securities and on the levels of interest rates generally. While the
amortized cost method provides certainty in valuation, it may result in periods
when the value so determined is higher or lower than the price the Portfolio
would receive if the security were sold.
Pursuant to a rule of the Securities and Exchange Commission, an
investment company may use the amortized cost method of valuation subject to
certain conditions and the determination that such method is in the best
interests of BBH ComSet's shareholders and the Portfolio's other investors. The
use of amortized cost valuations is subject to the following conditions: (i) as
a particular responsibility within the overall duty of care owed to the
Portfolio's investors, the Trustees of the Portfolio have established procedures
reasonably designed, taking into account current market conditions and the
investment objective of its investors, to stabilize the net asset value as
computed; (ii) the procedures include periodic review by the Trustees of the
Portfolio, as they deem appropriate and at such intervals as are reasonable in
light of current market conditions, of the relationship between the value of the
Portfolio's net assets using amortized cost and the value of the Portfolio's net
assets based upon available indications of market value with respect to such
portfolio securities; (iii) the Trustees of the Portfolio will consider what
steps, if any, should be taken if a difference of more than 1/2 of 1% occurs
between the two methods of valuation; and (iv) the Trustees of the Portfolio
will take such steps as they consider appropriate, such as shortening the
average portfolio maturity, realizing gains or losses, establishing the value of
the Portfolio's net assets by using available market quotations, or reducing the
value of interests in the Portfolio, to minimize any material dilution or other
unfair results which might arise from differences between the two methods of
valuation.
Such conditions also generally require that: (i) investments for the
Portfolio be limited to instruments which the Trustees of the Portfolio
determine present minimal credit risks and which are of high quality as
determined by any nationally recognized statistical rating organization that is
not an affiliated person of the issuer of, or any issuer, guarantor or provider
of credit support for, the instrument, or, in the case of any instrument that is
not so rated, is of comparable quality as determined by the Investment Adviser
under the general supervision of the Trustees of the Portfolio; (ii) a
dollar-weighted average portfolio maturity of not more than 90 days be
maintained and no instrument is purchased with a remaining maturity of more than
397 days; (iii) the Portfolio's available cash will be invested in such a manner
as to reduce such maturity to 90 days or less as soon as is reasonably
practicable, if the disposition of a portfolio security results in a
dollar-weighted average portfolio maturity of more than 90 days; and (iv) no
more than 5% of the Portfolio's total assets may be invested in the securities
of any one issuer (other than U.S. Government securities).
It is expected that BBH ComSet will have a positive net income at the
time of each determination thereof. If for any reason BBH ComSet's net income is
a negative amount, which could occur, for instance, upon default by an issuer of
a portfolio security, BBH ComSet would first offset the negative amount with
respect to each shareholder account from the dividends declared during the month
with respect to those accounts. If and to the extent that negative net income
exceeds declared dividends at the end of the month, BBH ComSet would reduce the
number of outstanding Fund shares by treating each shareholder as having
contributed to the capital of BBH ComSet that number of full and fractional
shares in his or her account which represents his or her share of the amount of
such excess. Each shareholder would be deemed to have agreed to such
contribution in these circumstances by his or her investment in BBH ComSet.
COMPUTATION OF PERFORMANCE
The current and effective yields of BBH ComSet may be used from time to
time in shareholder reports or other communications to shareholders or
prospective investors. Seven-day current yield is computed by dividing the net
change in account value (exclusive of capital changes) of a hypothetical
pre-existing account having a balance of one share at the beginning of a
seven-day calendar period by the value of that account at the beginning of that
period, and multiplying the return over the seven-day period by 365/7. For
purposes of the calculation, net change in account value reflects the value of
additional shares purchased with dividends from the original share and dividends
declared on both the original share and any such additional shares, but does not
reflect realized gains or losses or unrealized appreciation or depreciation. In
addition, BBH ComSet may use an effective annualized yield quotation for BBH
ComSet computed on a compounded basis by adding 1 to the base period return
(calculated as described above), raising the sum to a power equal to 365/7, and
subtracting 1 from the result.
The yield should not be considered a representation of the yield of BBH
ComSet in the future since the yield is not fixed. Actual yields will depend on
the type, quality and maturities of the investments held for the Portfolio,
changes in interest rates on investments, and BBH ComSet's expenses during the
period.
Yield information may be useful for reviewing the performance of BBH
ComSet and for providing a basis for comparison with other investment
alternatives. However, unlike bank deposits or other investments which pay a
fixed yield for a stated period of time, BBH ComSet's yield does fluctuate, and
this should be considered when reviewing performance or making comparisons.
BBH ComSet's "yield" and "effective yield" may be used from time to time
in shareholder reports or other communications to shareholders or prospective
investors. Both yield figures are based on historical earnings and are not
intended to indicate future performance. Performance information may include BBH
ComSet's investment results and/or comparisons of its investment results to
various unmanaged indexes (such as 1-month LIBOR) and to investments for which
reliable performance data is available. Performance information may also include
comparisons to averages, performance rankings or other information prepared by
recognized mutual fund statistical services. To the extent that unmanaged
indexes are so included, the same indexes will be used on a consistent basis.
BBH ComSet's investment results as used in such communications are calculated in
the manner set forth below.
The "yield" of BBH ComSet refers to the income generated by an investment
in BBH ComSet over a seven-day period (which period will be stated). This income
is then "annualized". That is, the amount of income generated by the investment
during that week is assumed to be generated each week over a 52-week period and
is shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in BBH ComSet
is assumed to be reinvested. The "effective yield" is slightly higher than the
"yield" because of the compounding effect of this assumed reinvestment.
The Portfolio commenced operations as of October 31, 1994 after the
transfer to it of all of the assets of The 59 Wall Street Money Market Fund
("Money Market Fund") in exchange for an interest in the Portfolio. The Money
Market Fund has investment policies, objective, guidelines and restrictions that
are in all material respects equivalent to those of the Portfolio. The assets of
the Portfolio as of October 31, 1994 were the same as the assets of the Money
Market Fund immediately prior to the transfer. While the Money Market Fund
continues to exist, its assets consist solely of its interest in the Portfolio.
Since, in a practical sense, the Money Market Fund constitutes the "predecessor"
of the Portfolio, the performance of the Portfolio is calculated for periods or
portions thereof that commenced prior to the transfer of the Money Market Fund's
assets to the Portfolio by including the performance of the Money Market Fund,
with appropriate adjustments.
PURCHASES AND REDEMPTIONS
A confirmation of each purchase and redemption transaction is issued
on execution of that transaction.
A shareholder's right to receive payment with respect to any redemption
may be suspended or the payment of the redemption proceeds postponed: (i) during
periods when the New York Stock Exchange is closed for other than weekends and
holidays or when regular trading on such Exchange is restricted as determined by
the Securities and Exchange Commission by rule or regulation, (ii) during
periods in which an emergency exists which causes disposal of, or evaluation of
the net asset value of, portfolio securities to be unreasonable or
impracticable, or (iii) for such other periods as the Securities and Exchange
Commission may permit.
An investor should be aware that redemptions from BBH ComSet may not be
processed if a completed account application with a certified taxpayer
identification number has not been received.
In the event a shareholder redeems all shares held in BBH ComSet at any
time during the month, all accrued but unpaid dividends are included in the
proceeds of the redemption and future purchases of shares of BBH ComSet by such
shareholder would be subject to BBH ComSet's minimum initial purchase
requirements.
BBH ComSet reserves the right to discontinue, alter or limit the
automatic reinvestment privilege at any time, but will provide shareholders
prior written notice of any such discontinuance, alteration or limitation.
FEDERAL TAXES
Dividends of net income and net short-term capital gains, if any, are
taxable to shareholders of BBH ComSet as ordinary income, whether such dividends
are paid in cash or reinvested in additional shares. These distributions are not
eligible for the dividends-received deduction allowed to corporate shareholders.
Each year, BBH ComSet intends to continue to qualify and elect that it
be treated as a separate "regulated investment company" under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). Under Subchapter M
of the Code BBH ComSet is not subject to federal income taxes on amounts
distributed to shareholders. A 4% non-deductible excise tax is imposed on BBH
ComSet to the extent that certain distribution requirements for BBH ComSet for
each calendar year are not met. BBH ComSet intends to continue to meet such
requirements. The Portfolio is also not required to pay any federal income or
excise taxes.
Qualification as a regulated investment company under the Code
requires, among other things, that (a) at least 90% of BBH ComSet's annual gross
income, without offset for losses from the sale or other disposition of
securities, be derived from interest, payments with respect to securities loans,
dividends and gains from the sale or other disposition of securities or other
income derived with respect to its business of investing in such securities; (b)
less than 30% of BBH ComSet's annual gross income be derived from gains (without
offset for losses) from the sale or other disposition of securities held for
less than three months; and (c) the holdings of BBH ComSet be diversified so
that, at the end of each quarter of its fiscal year, (i) at least 50% of the
market value of BBH ComSet's assets be represented by cash, U.S. Government
securities and other securities limited in respect of any one issuer to an
amount not greater than 5% of BBH ComSet's assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of BBH
ComSet's assets be invested in the securities of any one issuer (other than U.S.
Government securities and securities of other investment companies). In
addition, in order not to be subject to federal income tax, at least 90% of BBH
ComSet's net investment income and net short-term capital gains earned in each
year must be distributed to BBH ComSet's shareholders.
To maintain a constant $1.00 per share net asset value, the Directors
may direct that the number of outstanding shares be reduced pro rata. If this
adjustment is made, it will reflect the lower market value of portfolio
securities and not realized losses.
Other Taxes. The treatment of BBH ComSet and its shareholders in those
states which have income tax laws might differ from treatment under the federal
income tax laws. Distributions to shareholders may be subject to additional
state and local taxes. Shareholders are urged to consult their tax advisors
regarding any state or local taxes.
Other Information. Annual notification as to the tax status of capital
gains distributions, if any, is provided to shareholders shortly after June 30,
the end of BBH ComSet's fiscal year. Additional tax information is mailed to
shareholders in January. Under U.S. Treasury regulations, BBH ComSet is required
to withhold and remit to the U.S. Treasury a portion (31%) of dividends and
capital gains distributions on the accounts of those shareholders who fail to
provide a correct taxpayer identification number (Social Security Number for
individuals) or to make required certifications, or who have been notified by
the Internal Revenue Service that they are subject to such withholdings.
Prospective investors should submit an IRS Form W-9 to avoid such withholding.
This tax discussion is based on the tax laws and regulations in effect on
the date of this Prospectus, however such laws and regulations are subject to
change. Shareholders and prospective investors are urged to consult their tax
advisors regarding specific questions relevant to their particular
circumstances.
DESCRIPTION OF SHARES
BBH ComSet is an open-end management investment company organized as a
Maryland corporation on July 31, 2000. Its offices are located at 21 Milk
Street, Boston, Massachusetts 02109; its telephone number is (617) 423-0800. The
Articles of Incorporation currently permit BBH ComSet to issue 25,000,000,000
shares of common stock, par value $0.001 per share. The Board of Directors has
the power to designate on or more series of shares of common stock and to
classify and reclassify any unissued shares with respect to such series.
Each Fund share represents an equal proportionate interest in BBH ComSet
with each other share. Upon liquidation or dissolution of BBH ComSet, BBH
ComSet's shareholders are entitled to share pro rata in BBH ComSet's net assets
available for distribution to its shareholders.
Shareholders are entitled to one vote for each share held on matters on
which they are entitled to vote. Shareholders in BBH ComSet do not have
cumulative voting rights, and shareholders owning more than 50% of the
outstanding shares of BBH ComSet may elect all of the Directors of BBH ComSet if
they choose to do so and in such event the other shareholders in BBH ComSet
would not be able to elect any Director of BBH ComSet. BBH ComSet is not
required and has no current intention to hold meetings of shareholders annually
but BBH ComSet will hold special meetings of shareholders when in the judgment
of BBH ComSet's Directors it is necessary or desirable to submit matters for a
shareholder vote. Shareholders have under certain circumstances (e.g., upon
application and submission of certain specified documents to the Directors of
BBH ComSet by a specified number of shareholders) the right to communicate with
other shareholders in connection with requesting a meeting of shareholders for
the purpose of removing one or more Directors of BBH ComSet. Shareholders also
have the right to remove one or more Directors of BBH ComSet without a meeting
by a declaration in writing by a specified number of shareholders. Shares have
no preference, pre-emptive, conversion or similar rights. The rights of
redemption are described in the offering circular. Shares are fully paid and
non-assessable by BBH ComSet.
Stock certificates are not issued by BBH ComSet.
The By-Laws of BBH ComSet provide that the presence in person or by proxy
of the holders of record of one half of the shares of BBH ComSet outstanding and
entitled to vote thereat shall constitute a quorum at all meetings of Fund
shareholders, except as otherwise required by applicable law. The By-Laws
further provide that all questions shall be decided by a majority of the votes
cast at any such meeting at which a quorum is present, except as otherwise
required by applicable law.
The Articles of Incorporation and the By-Laws of BBH ComSet provide that
BBH ComSet indemnify the Directors and officers of BBH ComSet to the full extent
permitted by the Maryland Corporation Law, which permits indemnification of such
persons against liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with BBH ComSet. However,
nothing in the Articles of Incorporation or the By-Laws of BBH ComSet protects
or indemnifies a Director or officer of BBH ComSet against any liability to BBH
ComSet or its shareholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
The Portfolio, in which all of the assets of BBH ComSet are invested, is
organized as a trust under the law of the State of New York. The Portfolio's
Declaration of Trust provides that BBH ComSet and other entities investing in
the Portfolio (e.g., other investment companies, insurance company separate
accounts and common and commingled trust funds) are each liable for all
obligations of the Portfolio. However, the risk of BBH ComSet incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and the Portfolio itself was unable to meet
its obligations. Accordingly, the Directors of BBH ComSet believe that neither
BBH ComSet nor its shareholders will be adversely affected by reason of the
investment of all of the assets of BBH ComSet in the Portfolio.
Each investor in the Portfolio, including BBH ComSet, may add to or
reduce its investment in the Portfolio on each day the New York Stock Exchange
is open for regular trading and New York banks are open for business. At 4:00
P.M., New York time on each such business day, the value of each investor's
beneficial interest in the Portfolio is determined by multiplying the net asset
value of the Portfolio by the percentage, effective for that day, which
represents that investor's share of the aggregate beneficial interests in the
Portfolio. Any additions or withdrawals, which are to be effected on that day,
are then effected. The investor's percentage of the aggregate beneficial
interests in the Portfolio is then recomputed as the percentage equal to the
fraction (i) the numerator of which is the value of such investor's investment
in the Portfolio as of 4:00 P.M., New York time on such day plus or minus, as
the case may be, the amount of any additions to or withdrawals from the
investor's investment in the Portfolio effected on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of
4:00 P.M., New York time on such day plus or minus, as the case may be, the
amount of the net additions to or withdrawals from the aggregate investments in
the Portfolio by all investors in the Portfolio. The percentage so determined is
then applied to determine the value of the investor's interest in the Portfolio
as of 4:00 P.M., New York time on the following business day of the Portfolio.
Whenever BBH ComSet is requested to vote on a matter pertaining to the
Portfolio, BBH ComSet will vote its shares without a meeting of shareholders of
BBH ComSet if the proposal is one, if which made with respect to BBH ComSet,
would not require the vote of shareholders of BBH ComSet as long as such action
is permissible under applicable statutory and regulatory requirements. For all
other matters requiring a vote, BBH ComSet will hold a meeting of shareholders
of BBH ComSet and, at the meeting of investors in the Portfolio, BBH ComSet will
cast all of its votes in the same proportion as the votes of BBH ComSet's
shareholders even if all Fund shareholders did not vote. Even if BBH ComSet
votes all its shares at the Portfolio meeting, other investors with a greater
pro rata ownership in the Portfolio could have effective voting control of the
operations of the Portfolio.
Interests in the Portfolio have no preference, preemptive, conversion
or similar rights, and are fully paid and non-assessable. The Portfolio is not
required to hold annual meetings of investors, but will hold special meetings of
investors when, in the judgment of its trustees, it is necessary or desirable to
submit matters for an investor vote. Each investor is entitled to a vote in
proportion to the share of its investment in the Portfolio.
PORTFOLIO BROKERAGE TRANSACTIONS
Brown Brothers Harriman & Co., as Investment Adviser for the Portfolio,
places orders for all purchases and sales of portfolio securities, enters into
repurchase and reverse repurchase agreements and executes loans of portfolio
securities. Fixed-income securities are generally traded at a net price with
dealers acting as principal for their own account without a stated commission.
The price of the security usually includes a profit to the dealer. In
underwritten offerings, securities are purchased at a fixed price which includes
an amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. On occasion, certain money market
instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid. From time to time certificates of deposit may
be purchased through intermediaries who may charge a commission for their
services.
On those occasions when Brown Brothers Harriman & Co. deems the
purchase or sale of a security to be in the best interests of the Portfolio as
well as other customers, Brown Brothers Harriman & Co., to the extent permitted
by applicable laws and regulations, may, but is not obligated to, aggregate the
securities to be sold or purchased with those to be sold or purchased for other
customers in order to obtain best execution, including lower brokerage
commissions, if appropriate. In such event, allocation of the securities so
purchased or sold as well as any expenses incurred in the transaction are made
by Brown Brothers Harriman & Co. in the manner it considers to be most equitable
and consistent with its fiduciary obligations to its customers, including the
Portfolio. In some instances, this procedure might adversely affect the
Portfolio.
Although the Portfolio generally holds investments until maturity and
does not seek profits through short-term trading, it may dispose of any
portfolio security prior to its maturity if it believes such disposition
advisable.
Money market securities are generally traded on a net basis and do not
normally involve either brokerage commissions or transfer taxes. Where possible
transactions on behalf of the Portfolio are entered directly with the issuer or
from an underwriter or market maker for the securities involved. Purchases from
underwriters of securities may include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers serving as market makers
may include a spread between the bid and asked price. The policy of the
Portfolio regarding purchases and sales of securities is that primary
consideration will be given to obtaining the most favorable prices and efficient
executions of transactions. In seeking to implement the Portfolio's policies,
the Investment Adviser effects transactions with those brokers and dealers who
the Investment Adviser believes provide the most favorable prices and are
capable of providing efficient executions. If the Investment Adviser believes
such prices and executions are obtainable from more than one broker or dealer,
it may give consideration to placing portfolio transactions with those brokers
and dealers who also furnish research and other services to the Portfolio and or
the Investment Adviser. Such services may include, but are not limited to, any
one or more of the following: information as to the availability of securities
for purchase or sale; statistical or factual information or opinions pertaining
to investment; and appraisals or evaluations of portfolio securities.
BOND, NOTE AND COMMERCIAL PAPER RATINGS
There is no additional percentage limitation with respect to investments
in negotiable certificates of deposit, fixed time deposits and bankers'
acceptances of U.S. branches of U.S. banks and U.S. branches of non-U.S. banks
that are subject to the same regulation as U.S. banks. Since the Portfolio may
contain U.S. dollar-denominated certificates of deposit, fixed time deposits and
bankers' acceptances that are issued by non-U.S. banks and their non-U.S.
branches, the Portfolio may be subject to additional investment risks with
respect to those securities that are different in some respects from obligations
of U.S. issuers, such as currency exchange control regulations, the possibility
of expropriation, seizure or nationalization of non-U.S. deposits, less
liquidity and more volatility in non-U.S. securities markets and the impact of
political, social or diplomatic developments or the adoption of other foreign
government restrictions which might adversely affect the payment of principal
and interest on securities held by the Portfolio. If it should become necessary,
greater difficulties might be encountered in invoking legal processes abroad
than would be the case in the United States. Issuers of non-U.S. bank
obligations may be subject to less stringent or different regulations than are
U.S. bank issuers, there may be less publicly available information about a
non-U.S. issuer, and non-U.S. issuers generally are not subject to uniform
accounting and financial reporting standards, practices and requirements
comparable to those applicable to U.S. issuers. Income earned or received by the
Portfolio from sources within countries other than the United States may be
reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States, however, may reduce
or eliminate such taxes. All such taxes paid by the Portfolio would reduce its
net income available for distribution to investors (i.e., BBH ComSet and other
investors in the Portfolio); however, the Investment Adviser would consider
available yields, net of any required taxes, in selecting securities of non-U.S.
issuers. While early withdrawals are not contemplated, fixed time deposits are
not readily marketable and may be subject to early withdrawal penalties, which
may vary. Assets of the Portfolio are not invested in obligations of Brown
Brothers Harriman & Co., or the Distributor, or in the obligations of the
affiliates of any such organization. Assets of the Portfolio are also not
invested in fixed time deposits with a maturity of over seven calendar days, or
in fixed time deposits with a maturity of from two business days to seven
calendar days if more than 10% of the Portfolio's net assets would be invested
in such deposits.
Bond Ratings
Moody's Investors Service, Inc. ("Moody's")
Aaa - Bonds rated Aaa are judged to be of the "best quality". Issues
rated Aaa may be further modified by the numbers 1, 2 or 3 (3 being the highest)
to show relative strength within the rating category.
Standard & Poor's Corporation ("S&P")
AAA - The AAA rating is the highest rating assigned to debt obligations
and indicates an extremely strong capacity to pay principal and interest.
Note and Variable Rate Investment Ratings
Moody's - MIG-1. Notes rated MIG-1 are judged to be of the best
quality, enjoying strong protection from established cash flow of funds for
their services or from established and broad-based access to the market for
refinancing or both.
S&P - SP-1. SP-1 denotes a very strong or strong capacity to pay
principal and interest. Issues determined to possess overwhelming safety
characteristics are given a plus (+) designation (SP-1+).
Corporate Commercial Paper Ratings
Moody's - Commercial Paper ratings are opinions of the ability of
issuers to repay punctually promissory obligations not having an original
maturity in excess of nine months. Prime-1 indicates highest quality repayment
capacity of rated issue.
S&P - Commercial Paper ratings are a current assessment of the
likelihood of timely payment of debts having an original maturity of no more
than 365 days. Issues rated A-1 have the greatest capacity for timely payment.
Issues rated "A-1+" are those with an "overwhelming degree of credit
protection."
Other Considerations
Among the factors considered by Moody's in assigning bond, note and
commercial paper ratings are the following: (i) evaluation of the management of
the issuer; (ii) economic evaluation of the issuer's industry or industries and
an appraisal of speculative-type risks which may be inherent in certain areas;
(iii) evaluation of the issuer's products in relation to competition and
customer acceptance; (iv) liquidity; (v) amount and quality of long-term debt;
(vi) trend of earnings over a period of 10 years; (vii) financial strength of a
parent company and the relationships which exist with the issuer; and (viii)
recognition by management of obligations which may be present or may arise as a
result of public interest questions and preparations to meet such obligations.
Among the factors considered by S&P in assigning bond, note and
commercial paper ratings are the following: (i) trend of earnings and cash flow
with allowances made for unusual circumstances, (ii) stability of the issuer's
industry, (iii) the issuer's relative strength and position within the industry
and (iv) the reliability and quality of management.
ADDITIONAL INFORMATION
As used in this Statement of Additional Information and the Prospectus,
the term "majority of the outstanding voting securities" (as defined in the 1940
Act) currently means the vote of (i) 67% or more of the outstanding voting
securities present at a meeting, if the holders of more than 50% of the
outstanding voting securities are present in person or represented by proxy; or
(ii) more than 50% of the outstanding voting securities, whichever is less.
Fund shareholders receive semi-annual reports containing unaudited
financial statements and annual reports containing financial statements audited
by independent auditors.
Other mutual funds or institutional investors may invest in the Portfolio
on the same terms and conditions as BBH ComSet. However, these other investors
may have different operating expenses which may generate different aggregate
performance results. Information concerning other investors in the Portfolio is
available from Brown Brothers Harriman & Co.
BBH ComSet may withdraw its investment in the Portfolio as a result of
certain changes in the Portfolio's investment objective, policies or
restrictions or if the Board of Directors of BBH ComSet determines that it is
otherwise in the best interests of BBH ComSet to do so. Upon any such
withdrawal, the Board of Directors of BBH ComSet would consider what action
might be taken, including the investment of all of the assets of BBH ComSet in
another pooled investment entity or the retaining of an investment adviser to
manage BBH ComSet's assets in accordance with the investment policies described
above with respect to the Portfolio. In the event the Directors of BBH ComSet
were unable to accomplish either, the Directors will determine the best course
of action.
FINANCIAL STATEMENTS
BBH ComSet's statement of assets and liabilities dated August 16, 2000
included herein has been included in reliance upon the report of Deloitte &
Touche LLP, independent auditors for BBH ComSet.
<PAGE>
BBH COMMON SETTLEMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
August 16, 2000
ASSETS:
Cash................................................ $100,000
LIABILITIES:
Accrued expenses.................................... -
--------------
NET ASSETS.................................................. $100,000
See Notes to Statement of Assets and Liabilities.
<PAGE>
BBH COMMON SETTLEMENT FUND, INC.
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
1. Organization. BBH Common Settlement Fund, Inc. ("BBH ComSet") is
registered under the Investment Company Act of 1940, as amended, as an
open-ended management investment company, which was organized as a corporation
under the laws of the State of Maryland on July 31, 2000. As of August 16, 2000,
BBH ComSet has not commenced operations.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Directors and Shareholders
BBH Common Settlement Fund, Inc.
We have audited the accompanying statement of assets and liabilities of BBH
Common Settlement Fund, Inc. (the "Fund") as of August 16, 2000 (expressed in
United States dollars). This financial statement is the responsibility of the
Fund's management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the statement is
free from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit 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, this statement of assets and liabilities presents fairly, in all
material respects, the financial position of the Fund as of August 16, 2000 in
conformity with accounting principles generally accepted in the United States of
America.
Deloitte & Touche LLP
/s/DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 21, 2000
<PAGE>
PART C
Item 23. Exhibits.
(a) Articles of Incorporation.(1)
(b) By-laws.(1)
(c) Not Applicable.
(d) Not Applicable.
(e) Placement Agent Agreement.(1)
(f) Not Applicable.
(g) Not Applicable.
(h)(i) Administration Agreement. (1)
(h)(ii) Subadministration Agreement.(1)
(h)(iii) Expense Payment Agreement. (1)
(i) Not Applicable.
(j) Not Applicable.
(k) Not Applicable.
(l) Investment representation letters
of initial investors.(1)
(m) Not Applicable.
(n) Not Applicable.
(o) Not Applicable.
(p)(i)Code of Ethics of the Fund.(1)
(p)(ii)Code of Ethics of the Brown Brothers Harriman & Co.(1)
(p)(iii) Code of Ethics of 59 Wall Street Distributors, Inc. (1)
_____________________________
(1) Filed herewith.
<PAGE>
Item 24. Persons Controlled by or Under Common Control with Registrant.
Not applicable.
Item 25. Indemnification.
Reference is made to Article VII of Registrant's By-Laws and to Section 5
of the Placement Agent Agreement between the Registrant and 59 Wall Street
Distributors, Inc.
Registrant, its Directors and officers, and persons affiliated with
them are insured against certain expenses in connection with the defense of
actions, suits or proceedings, and certain liabilities that might be imposed as
a result of such actions, suits or proceedings.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to Directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, officer of controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Adviser.
The Registrant's investment adviser, Brown Brothers Harriman & Co., is
a New York limited partnership. Brown Brothers Harriman & Co. conducts a general
banking business and is a member of the New York Stock Exchange.
To the knowledge of the Registrant, none of the general partners or
officers of Brown Brothers Harriman & Co. is engaged in any other business,
profession, vocation or employment of a substantial nature.
C-2
<PAGE>
Item 27. Principal Underwriters.
Not applicable.
Item 28. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained at the offices of:
BBH Common Settlement Fund, Inc.
63 Wall Street
New York, NY 10005
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
(investment adviser)
Brown Brothers Harriman Trust Company, LLC
63 Wall Street
New York, NY 10005
(administrator)
59 Wall Street Administrators, Inc.
21 Milk Street
Boston, MA 02109
(subadministrator)
59 Wall Street Distributors, Inc.
21 Milk Street
Boston, MA 02109
(placement agent)
Item 29. Management Services.
Not applicable.
Item 30. Undertakings.
Not applicable.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, BBH
Common Settlement Fund, Inc. has duly caused this registration statement on Form
N-1A to be signed on its behalf by the undersigned, thereto duly authorized, in
the City of Boston, Commonwealth of Massachusetts on the 21st day of August,
2000.
BBH Common Settlement Fund, Inc.
By: /s/PHILIP W. COOLIDGE
Philip W. Coolidge
President
<PAGE>
SIGNATURES
BBH U.S. Money Market Portfolio (the "Portfolio") has duly caused this
Registration Statement on Form N-1A ("Registration Statement") of BBH Common
Settlement Fund, Inc. to be signed on its behalf by the undersigned, thereto
duly authorized in the City of Boston, Massachusetts on the 21st day of August,
2000.
BBH U.S. MONEY MARKET PORTFOLIO
By: /s/PHILIP W. COOLIDGE
(Philip W. Coolidge, President)
Pursuant to the requirements of the Investment Company Act of 1940, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated above.
SIGNATURE TITLE
President
/s/PHILIP W. COOLIDGE (Principal Executive Officer)
(Philip W. Coolidge)
/s/RICHARD L. CARPENTER Trustee
(Richard L. Carpenter)
/s/CLIFFORD A. CLARK Trustee
(Clifford A. Clark)
/s/DAVID M. SEITZMAN Trustee
(David M. Seitzman)
/s/JOSEPH V. SHIELDS, JR. Trustee
(J.V. Shields, Jr.)
/s/EUGENE P. BEARD Trustee
(Eugene P. Beard)
/s/DAVID P. FELDMAN Trustee
(David P. Feldman)
/s/ARTHUR D. MILTENBERGER Trustee
(Arthur D. Miltenberger)
/s/ALAN G. LOWY Trustee
(Alan G. Lowy)
Treasurer (Principal Financial
/s/LINWOOD C. DOWNS Officer and Principal
(Linwood C. Downs) Accounting Officer) of the
Portfolio
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
---------- ----------------------
EX-99.(a) Articles of Incorporation
EX-99.(b) By-laws
EX-99.(e) Placement Agent Agreement
EX-99.(h) Administration Agreement
EX-99.(h)(i) Expense Payment Agreement
EX-99.(l) Investment Representation Letters of initial investors
EX-99.(p)(i) Code of Ethics of the Fund
EX-99.(p)(ii) Code of Ethics of Brown Brothers Harriman & Co.
EX-99.(p)(iii) Code of Ethics of 59 Wall Street Distributors, Inc.