Tax Free Short/Intermediate
Fixed Income Fund
PROSPECTUS
November 1, 1995
[LOGO] PHOTO
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PROSPECTUS
The 59 Wall Street Tax Free
Short/Intermediate Fixed Income Fund
6 St. James Avenue, Boston, Massachusetts 02116
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The 59 Wall Street Tax Free Short/Intermediate Fixed Income Fund is an
open-end investment company which is a separate diversified portfolio of The 59
Wall Street Trust. Shares of the Fund are offered by this Prospectus.
The investment objective of the Fund is to provide investors with as high a
level of income exempt from federal income tax as is consistent with minimizing
price fluctuations in net asset value and maintaining liquidity. The Fund
invests primarily in high quality municipal securities and the dollar weighted
average maturity of the Fund's portfolio does not exceed three years. The Fund
is an appropriate investment for those investors seeking tax-free income returns
greater than those provided by tax-free money market funds and who are able to
accept fluctuations in the net asset value of their investment. The Fund is
designed to have lesser price fluctuations than long term bond funds. There can
be no assurance that the investment objective of the Fund will be achieved.
Investments in the Fund are neither insured nor guaranteed by the U.S.
Government. Shares of the Fund are not deposits or obligations of, or guaranteed
by, Brown Brothers Harriman & Co., and the shares are not insured by the Federal
Deposit Insurance Corporation or any other federal, state or other governmental
agency.
Brown Brothers Harriman & Co. is the investment adviser to, the
administrator of and an eligible institution of the Fund. Shares of the Fund are
offered at net asset value without a sales charge to customers of Brown Brothers
Harriman & Co.
This Prospectus, which investors are advised to read and retain for future
reference, sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. Additional information
about the Fund has been filed with the Securities and Exchange Commission in a
Statement of Additional Information, dated November 1, 1995. This information is
incorporated herein by reference and is available without charge upon request
from the Fund's distributor, 59 Wall Street Distributors, Inc., 6 St. James
Avenue, Boston, Massachusetts 02116.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is November 1, 1995.
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TABLE OF CONTENTS
Page
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Expense Table ............................................................. 3
Financial Highlights ...................................................... 4
Investment Objective and Policies ......................................... 4
Investment Restrictions ................................................... 7
Purchase of Shares ........................................................ 8
Redemption of Shares ...................................................... 8
Management of the Trust ................................................... 9
Net Asset Value ........................................................... 13
Dividends and Distributions ............................................... 13
Taxes ..................................................................... 13
Description of Shares ..................................................... 15
Additional Information .................................................... 16
Appendix A ................................................................ 18
Appendix B ................................................................ 20
TERMS USED IN THIS PROSPECTUS
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Trust ............................................... The 59 Wall Street Trust
Fund ................................................ The 59 Wall Street Tax Free Short/Intermediate
Fixed Income Fund
Investment Adviser and Administrator................. Brown Brothers Harriman & Co.
Subadministrator..................................... 59 Wall Street Administrators, Inc.
("59 Wall Street Administrators")
Distributor.......................................... 59 Wall Street Distributors, Inc.
("59 Wall Street Distributors")
1940 Act............................................. The Investment Company Act of 1940,
as amended.
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EXPENSE TABLE
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The following table provides (i) a summary of estimated expenses relating
to purchases and sales of shares of the Fund, and the aggregate annual operating
expenses of the Fund, as a percentage of average net assets of the Fund, and
(ii) an example illustrating the dollar cost of such estimated expenses on a
$1,000 investment in the Fund.
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases........................................ None
Sales Load Imposed on Reinvested Dividends............................. None
Deferred Sales Load.................................................... None
Redemption Fee......................................................... None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Investment Advisory Fee...................................... 0.35%
12b-1 Fee.................................................... None
Other Expenses
Administration Fee ........................................ 0.15%
Expense Payment Fee........................................ 0.20 0.35
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Total Fund Operating Expenses................................ 0.70%
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Example
------- 1 year 3 years 5 years 10 years
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A shareholder of the Fund would pay the following
expenses on a $1,000 investment, assuming (1)
5% annual return, and (2) redemption at the end
of each time period:........................... $ 7 $22 $39 $87
--- --- --- ---
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The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. In connection
with the Example, please note that $1,000 is currently less than the Fund's
minimum purchase requirement. The purpose of this table is to assist investors
in understanding the various costs and expenses that shareholders of the Fund
bear directly or indirectly.
Under an agreement dated February 22, 1995, 59 Wall Street Administrators
pays the Fund's expenses, other than fees paid to Brown Brothers Harriman & Co.
under the Trust's Administration Agreement and other than expenses relating to
the organization of the Fund. Had this expense payment agreement not been in
place, the total Fund operating expenses would have been 0.99% of the Fund's
average annual net assets and the shareholder expenses reflected in the example
above would have been $10, $32, $55, and $121, respectively. After this expense
payment agreement terminates on July 1, 1997, the Trustees of the Trust estimate
that, at the Fund's current asset level, the total Fund operating expenses may
increase to approximately 1.00% of the Fund's average annual net assets. (See
"Expense Payment Agreement".)
For more information with respect to the expenses of the Fund, see
"Management of the Trust" herein.
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FINANCIAL HIGHLIGHTS
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The following information for the fiscal years ended June 30, 1995 and 1994
and the period July 23, 1992 (commencement of operations) to June 30, 1993 has
been audited by Deloitte & Touche LLP, independent auditors. This information
should be read in conjunction with the financial statements and notes thereto,
which appear in the Statement of Additional Information. The ratios of expenses
and net investment income to average net assets are not indicative of future
ratios.
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For the period
For the years July 23, 1992
ended June 30, (commencement of
---------------------- operations) to
1995 1994 June 30, 1993
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Net asset value, beginning of period.......................... $ 10.11 $ 10.29 $ 10.00
Income from investment operations:
Net investment income ...................................... 0.37 0.34 0.32
Net realized and unrealized gain (loss) on investments...... 0.17 (0.18) 0.29
Less dividends and distributions:
Dividends to shareholders from net investment income........ (0.37) (0.34) (0.32)
Distributions to shareholders from net realized gains
on investments........................................... -- (0.00)** --
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Net asset value, end of period................................ $ 10.28 $ 10.11 $ 10.29
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Total return* ................................................ 5.42% 1.59% 6.16%***
Ratios/supplemental data:
Net assets, end of period (000's omitted)................... $51,828 $67,253 $33,202
Ratio of expenses to average net assets*.................... 0.70% 0.70% 0.70%***
Ratio of net investment income to average net assets ....... 3.67% 3.32% 3.42%***
Portfolio turnover rate .................................... 38.70% 26.75% 12.68%
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* Had the expense payment agreement not been in place, the ratio of expenses
to average net assets, for the years ended June 30, 1995 and June 30, 1994
and for the period ended June 30, 1993, would have been 0.99%, 1.01%, and
1.25%, respectively. For the same periods, the total return of the Fund
would have been 5.13%, 1.28% and 5.61%, respectively.
** Distributions to shareholders from net realized gains was less than $0.01
per share.
*** Annualized.
Further information about the performance of the Fund is contained in the
Fund's annual report to shareholders which may be obtained without charge.
INVESTMENT OBJECTIVE AND POLICIES
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The investment objective of the Fund is to provide investors with as high a
level of income exempt from federal income tax as is consistent with minimizing
price fluctuations in net asset value and maintaining liquidity.
The investment objective of the Fund is a fundamental policy and may be
changed only with the approval of the holders of a "majority of the Fund's
outstanding voting securities as defined in the 1940 Act". (See "Additional
Information" in this Prospectus.) However, the investment policies of the Fund
as described below are not fundamental and may be changed without such approval.
The Fund is an appropriate investment for those investors seeking tax-free
income returns greater than those provided by tax-free money market funds and
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who are able to accept fluctuations in the net asset value of their investments.
The Fund is designed to have lesser price fluctuations than long-term tax-free
bond funds.
The assets of the Fund under normal circumstances are fully invested in a
broad range of high quality municipal securities issued by or on behalf of
states, territories and possessions of the United States, the District of
Columbia and their subdivisions, agencies and instrumentalities. These
securities include municipal bonds, notes, commercial paper, variable and
floating rate instruments and when-issued and delayed delivery securities. (See
Appendix A for more detail.)
While the Fund intends to continue to be fully invested in tax-exempt
municipal obligations in order to provide investors with tax-free income, a
portion of the assets may temporarily be held in cash or invested in short-term
taxable securities if market conditions warrant. These would include obligations
issued by the U.S. Government, its agencies or instrumentalities, commercial
paper issued by corporations, bank obligations (such as certificates of deposit
and bankers' acceptances) and repurchase agreements. (See Appendix B for more
detail.)
The Fund invests in high quality municipal securities. At the time of
purchase, municipal bond investments either are rated in one of the three
highest quality categories of the Standard & Poor's Corporation (meaning AAA, AA
or A), Moody's Investors Service, Inc. (meaning Aaa, Aa or A) or Fitch Investors
Service, Inc. (meaning AAA, AA or A) or, if unrated, are of comparable quality
as judged by the Investment Adviser. The Investment Adviser may at any time
purchase municipal bonds it believes to be defeased. Defeased municipal bonds
are either general obligation or revenue bonds that have been fully secured or
collateralized by an escrow account consisting of U.S. Government obligations
that can adequately meet interest and principal payments. As such, the original
issuer's credit obligation has been replaced by the escrowed securities. In
determining whether a municipal bond has been defeased, the Investment Adviser
relies upon brokers and dealers and upon various information reporting services
it believes to be reliable. At the time of purchase, tax-exempt note and
variable interest rate investments either are rated in one of the highest
quality categories of the Standard & Poor's Corporation (meaning SP-1 or SP-2),
Moody's Investors Service, Inc. (meaning MIG 1 or MIG 2), or Fitch Investors
Service, Inc. (meaning F-1+, F-1 or F-2) or, if unrated, are of comparable
quality as judged by the Investment Adviser. At the time of purchase, municipal
commercial paper investments either are rated in the highest quality category of
the Standard & Poor's Corporation (meaning A-1), Moody's Investors Service, Inc.
(meaning Prime-1) or Fitch Investors Service, Inc. (meaning F-1+ or F-1) or, if
unrated, are of comparable quality as judged by the Investment Adviser. Taxable
money market instruments purchased for the Fund are of high quality and meet the
credit standards established by the Trust's Board of Trustees.
The dollar-weighted average maturity of the Fund's portfolio is not to
exceed three years, and the maximum maturity of an issue at the time of purchase
is limited to five years. Since bonds with shorter maturities are less sensitive
to interest rate movements than those with longer maturities, the three-year
restriction on the Fund's dollar-weighted average maturity is designed to lessen
the price fluctuation of the Fund. For example, the following table illustrates
the effect a 2 percentage point change in interest rates would have on the price
of bonds of varying maturities. The 10- and 20-year bonds have more exposure to
interest rate movements and are subject to greater price volatility than the
shorter term bonds.
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Change in the Price of a Municipal Bond at Par
Yielding 5%
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2 Percentage Point 2 Percentage Point
Stated Increase In Decrease in
Maturity Interest Rates Interest Rates
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Eligible 1 Year -2% +2%
for 3 Years -5% +6%
Investment 5 Years -8% +9%
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Not Eligible 10 Years -14% +17%
for Investment 20 Years -21% +30%
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The Fund is actively managed by a team of investment professionals. (See
"Investment Adviser".) The Investment Adviser analyzes and monitors economic
trends, monetary policy, and bond credit ratings on a continuous basis. The
holdings in the portfolio are regularly reviewed in an effort to enhance
returns.
The Investment Adviser does not intend to invest the Fund's assets in
securities the interest on which would be taxable for investors subject to the
federal alternative minimum tax. Depending on the investor's tax bracket, the
Fund may provide higher after-tax income than is normally provided by comparable
taxable investments. The chart below illustrates the return a taxable investment
would have to yield in order to equal various tax-free returns.
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A TAXABLE INVESTMENT WOULD HAVE TO YEILD:
TO EQUAL A TAX- 15% 28% 31% 36% 39.6%
FREE YIELD OF: Tax Bracket* Tax Bracket* Tax Bracket* Tax Bracket Tax Bracket
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2% 2.4% 2.8% 2.9% 3.1% 3.3%
3% 3.5% 4.2% 4.3% 4.7% 5.0%
4% 4.7% 5.6% 5.8% 6.3% 6.6%
5% 5.9% 6.9% 7.2% 7.8% 8.3%
6% 7.1% 8.3% 8.7% 9.4% 9.9%
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* Joint Return Below $39,000 $39,001-$94,250 $94,251-$143,600 $143,601-$256,500 Above $256,500
* Single Return Below $23,350 $23,351-$56,550 $56,551-$117,950 $117,951-$256,500 Above $256,500
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The Trust may, in the future, seek to achieve the Fund's investment
objective by investing all of the Fund's assets in a no-load, diversified,
open-end management investment company having substantially the same investment
objective as the Fund. Shareholders will receive 30 days prior written notice
with respect to any such investment.
Risk Factors
Although the assets of the Fund are invested in high quality municipal
securities, the portfolio is subject to interest rate risk and credit risk.
Interest rate risk refers to the price fluctuation of a bond in response to
changes in interest rates. In general, bonds with shorter maturities are less
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sensitive to interest rate movements than those with longer maturities. Given
that the average weighted maturity of the portfolio's holdings is limited to
three years, the Fund normally has less exposure to interest rate risk than
longer-term bond funds.
Credit risk refers to the likelihood that an issuer will default on
interest or principal payments. The Fund is investing in high quality bonds with
a rating of A or better, which limits the portfolio's exposure to credit risk.
Portfolio Brokerage
The securities in which the Fund invests are traded primarily in the
over-the-counter market on a net basis and do not normally involve either
brokerage commissions or transfer taxes. Where possible transactions on behalf
of the Fund 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 bid and asked price. The policy of the Fund regarding purchases
and sales of securities is that primary consideration is given to obtaining the
most favorable prices and efficient executions of transactions. In seeking to
implement the Fund'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. While
reasonably competitive spreads or commissions are sought for the Fund, it will
not necessarily be paying the lowest spread or commission available. 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 Fund 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. For the fiscal years ended June 30, 1994 and 1995, the
portfolio turnover rates for the Fund were 26.75% and 38.70%, respectively. (See
"Portfolio Transactions" in the Statement of Additional Information.)
INVESTMENT RESTRICTIONS
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The Statement of Additional Information for the Fund includes a listing of
the specific investment restrictions which govern the Fund's investment
policies. Certain of these investment restrictions are deemed fundamental
policies and may be changed only with the approval of the holders of a "majority
of the Fund's outstanding voting securities as defined in the 1940 Act". (See
"Additional Information" in this Prospectus.)
As a non-fundamental policy, money is not borrowed in an amount in excess
of 10% of the assets of the Fund. It is intended that money will be borrowed
only from banks and only either to accommodate requests for the redemption of
shares 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 Fund at any time at which the amount of its borrowings exceed
5% of its assets.
Also as a non-fundamental policy, at least 80% of the Fund's assets is
invested in securities the interest on which is exempt from federal income
taxation.
As a fundamental policy, the Fund does not purchase more than 10% of all
outstanding debt securities of any one issuer.
The Fund is classified as "diversified" under the 1940 Act, which means
that at least 75% of its total assets is represented by cash; obligations issued
by the U.S. Government, its agencies or instrumentalities; and other securities
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limited in respect of any one issuer to an amount no greater in value than 5% of
the Fund's total assets (for the purpose of this restriction, the Fund regards
each state and each political subdivision, agency or instrumentality of such
state and each multi-state agency of which such state is a member and each
public authority which issues industrial development bonds on behalf of a
private entity as a separate issuer).
PURCHASE OF SHARES
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An investor may open a Fund account only through 59 Wall Street
Distributors, the Fund's exclusive Distributor. Each Eligible Institution (see
page 11) may establish and amend from time to time a minimum initial and a
minimum subsequent purchase requirement for their respective customers. The
Trust reserves the right to determine the purchase orders for Fund shares that
it will accept.
Shares of the Fund are offered on a continuous basis at their net asset
value without a sales charge. Shares of the Fund may be purchased on any day the
New York Stock Exchange is open for regular trading and New York banks are open
for business if the Trust receives the purchase order and acceptable payment for
such order prior to 4:00 P.M., New York time. Purchases of Fund shares are then
executed at the net asset value per share next determined on that same day. All
purchases must be paid for in immediately available funds on the third business
day after the purchase order has been executed. Shares are entitled to
dividends, if any, declared starting as of the third business day following the
day a purchase order is executed.
An investor who has a custody account with Brown Brothers Harriman & Co.
may place purchase orders for Fund shares with the Trust through Brown Brothers
Harriman & Co., which as an Eligible Institution holds such shares in its name
on behalf of that customer. For such a customer, Brown Brothers Harriman & Co.
arranges for the payment of the purchase price of Fund shares. Brown Brothers
Harriman & Co. has established for its customers a minimum initial purchase
requirement of $10,000 and a minimum subsequent purchase requirement for the
Fund of $1,000.
REDEMPTION OF SHARES
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Shares held by Brown Brothers Harriman & Co. on behalf of a shareholder may
be redeemed by submitting a redemption request in good order to Brown Brothers
Harriman & Co. Proceeds from the redemption of Fund shares are credited to the
shareholder's account with Brown Brothers Harriman & Co.
A redemption request in good order must be received by the Trust prior to
4:00 P.M., New York time on any day the New York Stock Exchange is open for
regular trading and New York banks are open for business. Such a redemption is
executed at the net asset value per share next determined on that same day.
Proceeds of a redemption are paid in "available" funds generally on the third
business day after the redemption request is executed, and in any event within
seven days.
If a redemption request is received by the Trust after 4:00 P.M., New York
time, the redemption request is executed on the next business day. Shares will
continue to earn dividends, if any, declared through the second business day
following the day a redemption request is executed.
Redemptions By the Trust
Each Eligible Institution (see page 11) may establish and amend from time
to time for their respective customers a minimum account size. If the value of a
shareholder's holdings in the Fund falls below that amount because of a
redemption of shares, the shareholder's remaining shares may be redeemed. If
such remaining shares are to be redeemed, the shareholder is so notified and is
allowed 60 days to make an additional investment to enable the shareholder to
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meet the minimum requirement before the redemption is processed. Brown Brothers
Harriman & Co., as an Eligible Institution, has established a minimum account
size of $10,000
Further Redemption Information
In the event a shareholder redeems all shares held in the Fund 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 the Fund by such shareholder
would be subject to the Fund's minimum initial purchase requirements. The value
of shares redeemed may be more or less than the shareholder's cost depending on
Fund performance during the period the shareholder owned such shares.
Redemptions of shares are taxable events on which a shareholder may realize a
gain or a loss.
An investor should be aware that redemptions from the Fund may not be
processed if a completed account application with a certified taxpayer
identification number has not been received.
A shareholder's right to receive payment with respect to any redemption may
be suspended or the payment of the redemption proceeds postponed for up to seven
days and for such other periods as the 1940 Act may permit. (See "Additional
Information" in the Statement of Additional Information.)
MANAGEMENT OF THE TRUST
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Trustees and Officers
The Trustees, in addition to supervising the actions of the Administrator,
Investment Adviser and Distributor of the Fund, as set forth below, decide upon
matters of general policy. Because of the services rendered the Trust by the
Investment Adviser and the Administrator, the Trust itself requires no employees
other than its officers, none of whom, other than the Chairman, receive
compensation from the Fund and all of whom, other than the Chairman, are
employed by 59 Wall Street Administrators. (See "Trustees and Officers" in the
Statement of Additional Information.)
The Trustees of the Trust are:
J.V. Shields, Jr.
Chairman and Chief Executive Officer of Shields & Company
Eugene P. Beard
Executive Vice President - Finance and Operations of The Interpublic
Group of Companies
David P. Feldman
Corporate Vice President--Investment Management of AT&T
Alan G. Lowy
Private Investor
Arthur D. Miltenberger
Vice President and Chief Financial Officer of
Richard K. Mellon and Sons
Investment Adviser
The Investment Adviser to the Fund 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.
Brown Brothers Harriman & Co. provides investment advice and portfolio
management services to the Fund. Subject to the general supervision of the
Trust's Trustees, Brown Brothers Harriman & Co. makes the day-to-day investment
decisions for the Fund, places the purchase and sale orders for the portfolio
transactions of the Fund, and generally manages the Fund's investments. Brown
Brothers Harriman & Co. provides a broad range of investment management services
for customers in the United States and abroad. At June 30, 1995, it managed
total assets of approximately $20 billion.
Mr. Eugene C. Rainis, Ms. Barbara Brinkley and Mr. Todd D. Jacobson of
Brown Brothers Harriman & Co. are primarily responsible for the day-to-day
management of the Fund. Mr. Rainis is the partner in charge of fixed income
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management and is directly responsible for setting fixed income investment
policy at Brown Brothers Harriman & Co. He joined Brown Brothers Harriman & Co.
in 1965 and his entire career has been in fixed income markets. Mr. Rainis is a
Director of the Jefferson Insurance Company of New York and the Monticello
Insurance Company, serves as a Trustee of Fordham University, and serves as
Trustee and Vice Chairman of the Board of St. Vincent's Hospital. Mr. Rainis
holds a B.S. from Fordham University, a M.B.A. from the Wharton School of the
University of Pennsylvania and is a Chartered Financial Analyst. Ms. Brinkley,
senior portfolio manager of the Fund since inception, joined Brown Brothers
Harriman & Co. in 1967. Throughout her career with Brown Brothers Harriman & Co.
Ms. Brinkley has specialized as a municipal bond credit analyst, trader and
portfolio manager. She is a member of Brown Brothers Harriman & Co.'s Fixed
Income Credit Committee, a member and former chairman of the Municipal Analysts
Group of New York and a member of the Fixed Income Analysts Society, Inc. Ms.
Brinkley holds a B.A. from Smith College. Mr. Jacobson, Assistant Portfolio
Manager of the Fund, joined Brown Brothers Harriman & Co. in 1993, following two
years experience at Value Line as an investment analyst. Mr. Jacobson holds a
B.A. from the State University of New York, Binghamton and a M.B.A. from The
Wharton School, University of Pennsylvania.
As compensation for the services rendered and related expenses such as
salaries of advisory personnel borne by Brown Brothers Harriman & Co. under the
Investment Advisory Agreement, Brown Brothers Harriman & Co. receives from the
Fund an annual fee, computed daily and payable monthly, equal to 0.35% of the
Fund's average daily net assets. Brown Brothers Harriman & Co. also receives an
annual administration fee and eligible institution fee from the Fund equal to
0.15% and 0.25%, respectively, of the average daily net assets of the Fund.
The investment advisory services of Brown Brothers Harriman & Co. to the
Fund 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 a license agreement between the Trust and Brown Brothers
Harriman & Co. dated August 24, 1989, as amended as of December 15, 1993, the
Trust may continue to use in its name "59 Wall Street", the current and historic
address of Brown Brothers Harriman & Co. The agreement may be terminated by
Brown Brothers Harriman & Co. at any time upon written notice to the Trust upon
the expiration or earlier termination of any investment advisory agreement
between the Fund or any investment company in which a series of the Trust
invests all of its assets and Brown Brothers Harriman & Co. Termination of the
agreement would require the Trust to change its name and the name of the Fund to
eliminate all reference to "59 Wall Street".
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".
Administrator
Brown Brothers Harriman & Co. acts as Administrator of the Trust. (See
"Administrator" in the Statement of Additional Information.)
In its capacity as Administrator, Brown Brothers Harriman & Co. administers
all aspects of the Trust's operations subject to the supervision of the Trust's
Trustees except as set forth below under "Distributor". In connection with its
responsibilities as Administrator and at its own expense, Brown Brothers
Harriman & Co. (i) provides the Trust 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 Trust; (ii) oversees the
performance of administrative and professional services to the Trust by others,
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including the Fund's Custodian, Transfer and Dividend Disbursing Agent; (iii)
provides the Trust 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 Trust's registration statement and the
Fund's prospectus, 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 the Trust and for the Fund and reports to
the Fund's shareholders and the Securities and Exchange Commission.
For the services rendered to the Trust and related expenses borne by Brown
Brothers Harriman & Co. as Administrator, Brown Brothers Harriman & Co. receives
from the Fund an annual fee, computed daily and payable monthly, equal to 0.15%
of the Fund's average daily net assets.
Pursuant to a Subadministrative Services Agreement with Brown Brothers
Harriman & Co., 59 Wall Street Administrators performs such subadministrative
duties for the Trust as are from time to time agreed upon by the parties. The
offices of 59 Wall Street Administrators are located at 6 St. James Avenue,
Boston, Massachusetts 02116. 59 Wall Street Administrators is a wholly-owned
subsidiary of Signature Financial Group, Inc. ("SFG"). SFG is not affiliated
with Brown Brothers Harriman & Co. 59 Wall Street Administrators'
subadministrative duties may include providing equipment and clerical personnel
necessary for maintaining the organization of the Trust, participation in the
preparation of documents required for compliance by the Trust with applicable
laws and regulations, preparation of certain documents in connection with
meetings of Trustees and shareholders of the Trust, 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 as is from time to time agreed upon but not in excess
of the amount paid to the Administrator from the Fund.
Eligible Institutions
The Trust has entered into an eligible institution agreement with Brown
Brothers Harriman & Co. pursuant to which Brown Brothers Harriman & Co., as
agent for the Trust with respect to shareholders of and prospective investors in
the Fund who have a custody account with Brown Brothers Harriman & Co., among
other things: provides necessary personnel and facilities to establish and
maintain certain shareholder accounts and records enabling it to hold, as agent,
its customers' shares in its name or its nominee name on the shareholder records
of the Trust; assists in processing purchase and redemption transactions;
arranges for the wiring of funds; transmits and receives funds in connection
with customer orders to purchase or redeem shares of the Fund; provides periodic
statements showing a customer's account balance and, to the extent practicable,
integrates such information with information concerning other customer
transactions otherwise effected with or through it; furnishes, either separately
or on an integrated basis with other reports sent to a customer, monthly and
annual statements and confirmations of all purchases and redemptions of Fund
shares in a customer's account; transmits proxy statements, annual reports,
updated prospectuses and other communications from the Trust to its customers;
and receives, tabulates and transmits to the Trust proxies executed by its
customers with respect to meetings of shareholders of the Fund. For these
services, Brown Brothers Harriman & Co. receives from the Fund an annual fee,
computed daily and payable monthly, equal to 0.25% of the average daily net
assets of the Fund represented by shares owned during the period for which
payment was being made by customers for whom Brown Brothers Harriman & Co. was
the holder or agent of record.
The eligible institution agreement with Brown Brothers Harriman & Co. is
non-exclusive and the Trust expects from time to time to enter into similar
agreements with other financial institutions. At such time as any such similar
agreement is entered into, references in this Prospectus to shareholders of and
prospective investors in the Fund who have a custody account with Brown Brothers
Harriman & Co. shall include such shareholders of and prospective investors in
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the Fund who have an account with the financial institution which entered into
such other agreement, except as expressly stated in this Prospectus.
Expense Payment Agreement
Under an agreement dated February 22, 1995, 59 Wall Street Administrators
pays the Fund's expenses (see "Expense Table") other than fees paid to Brown
Brothers Harriman & Co. under the Trust's Administration Agreement and other
than expenses relating to the organization of the Fund. In return, 59 Wall
Street Administrators receives a fee from the Fund such that after such payment
the aggregate expenses of the Fund do not exceed an agreed upon annual rate,
currently 0.70% of the average daily net assets of the Fund. Such fees are
computed daily and paid monthly. During the fiscal year ended June 30, 1995, 59
Wall Street Administrators incurred $498,700 in expenses on behalf of the Fund,
including investment advisory fees of $207,074 and eligible institution fees of
$147,910 and received fees of $317,562.
This expense payment agreement will terminate on July 1, 1997. After this
expense payment agreement terminates, the Trustees of the Trust estimate that,
at the Fund's current level, the total operating expenses of the Fund may
increase to approximately 1.00% of the Fund's average annual net assets.
The expenses of the Fund paid by 59 Wall Street Administrators under the
agreement include investment advisory fees, eligible institution fees, the
compensation of the Trustees of the Trust; governmental fees; interest charges;
taxes; membership dues in the Investment Company Institute; fees and expenses of
independent auditors, of legal counsel and of any transfer agent, custodian,
registrar or dividend disbursing agent of the Fund; insurance premiums; expenses
of calculating the net asset value of shares of the Fund; expenses of preparing,
printing and mailing prospectuses, reports, notices, proxy statements and
reports to shareholders and to governmental officers and commissions; expenses
of shareholder meetings; expenses relating to the issuance, registration and
qualification of shares of the Fund; and expenses connected with the execution,
recording and settlement of portfolio security transactions.
Distributor
59 Wall Street Distributors acts as exclusive Distributor of shares of the
Fund. Its office is located at 6 St. James Avenue, Boston, Massachusetts 02116.
59 Wall Street Distributors is a wholly-owned subsidiary of SFG. SFG and its
affiliates currently provide administration and distribution services for other
registered investment companies. The Trust pays for the preparation, printing
and filing of copies of the Trust's registration statement and the Fund's
prospectus as required under federal and state securities laws. (See
"Distributor" in the Statement of Additional Information.)
59 Wall Street Distributors holds itself available to receive purchase
orders for Fund shares.
Custodian, Transfer and
Dividend Disbursing Agent
State Street Bank and Trust Company, 225 Franklin Street, P.O. Box 351,
Boston, Massachusetts 02110, is the Fund's Custodian and Transfer and Dividend
Disbursing Agent. As Custodian, it is responsible for maintaining books and
records of the Fund's portfolio transactions and holding the Fund's portfolio
securities and cash pursuant to a custodian agreement with the Trust. Cash is
held for the Fund in demand deposit accounts at the Custodian. Subject to the
supervision of the Administrator, the Custodian maintains the Fund's accounting
and portfolio transaction records and for each day computes the Fund's net asset
value, net investment income and dividend payable. As Transfer and Dividend
Disbursing Agent it is responsible for maintaining the books and records
detailing the ownership of the Fund's shares.
Independent Auditors
Deloitte & Touche LLP are the independent auditors for the Fund.
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NET ASSET VALUE
================================================================================
The Fund's net asset value per share 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 determination of the Fund's net asset value per share is made by
subtracting from the value of the total assets of the Fund the amount of its
liabilities and dividing the difference by the number of shares of the Fund
outstanding at the time the determination is made.
Values of assets in the Fund's portfolio are determined on the basis of
their market or other fair value. (See "Net Asset Value" in the Statement of
Additional Information.)
DIVIDENDS AND DISTRIBUTIONS
================================================================================
Substantially all of the Fund's net investment income, together with a
discretionary portion of any net short-term capital gains, is declared as a
dividend daily and paid monthly. Dividends with respect to shares which were
redeemed during the month are paid at the end of the month. Dividends declared
with respect to a Saturday, Sunday or holiday are credited to shareholders of
record as of the close of business on the previous business day. Substantially
all of the Fund's realized net long-term capital gains, if any, are declared and
paid to shareholders on an annual basis as a capital gains distribution. An
additional dividend and/or capital gains distribution may be made to the extent
necessary to avoid the imposition of federal excise tax on the Fund. (See
"Taxes" below.) Dividends and capital gains distributions are payable to
shareholders of record on the record date.
Unless a shareholder otherwise elects, dividends and capital gains
distributions are automatically reinvested in additional Fund shares without
reference to the minimum subsequent purchase requirement. In the event a
shareholder redeems all shares held at any time during the month, all accrued
but unpaid dividends are included in the proceeds of the redemption and future
purchases of shares by such shareholder will be subject to the minimum initial
purchase requirements. The Trust 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.
A shareholder whose shares are held by Brown Brothers Harriman & Co. on
behalf of the shareholder and who elects to have dividends paid in cash has the
amount of such dividends automatically credited to the shareholder's account
with Brown Brothers Harriman & Co. Such a shareholder who elects to have
dividends reinvested is able to do so, in both whole and fractional shares.
TAXES
================================================================================
Each year, the Trust intends to continue to qualify the Fund and elect that
the Fund be treated as a separate "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, the Fund is
not subject to federal income taxes on its net income and realized net capital
gains that are distributed to its shareholders. A 4% non-deductible excise tax
is imposed on the Fund to the extent that certain distribution requirements for
the Fund for each calendar year are not met. The Trust intends to continue to
meet such requirements.
In accordance with the investment objective of the Fund, it is expected
that the Fund's net income is attributable to interest from municipal bonds and,
as a result, dividends to shareholders are designated by the Trust as "exempt
interest dividends" under Section 852(b)(5) of the Code, which may be treated as
items of interest excludible from a shareholder's gross income. Although it is
13
<PAGE>
not intended, it is possible that the Fund may realize short-term or long-term
capital gains or losses from securities transactions as well as taxable interest
income depending on market conditions.
In accordance with Section 852(b)(5) of the Code, in order for the Fund to
be entitled to pay exempt interest dividends to shareholders, at the close of
each quarter of its taxable year, at least 50% of the value of its total assets
must consist of obligations whose interest is exempt from federal income tax.
The non-exempt portion of dividends is taxable to shareholders of the Fund
as ordinary income, whether such dividends are paid in cash or reinvested in
additional shares. These dividends are not eligible for the dividends-received
deduction allowed to corporate shareholders. Capital gains distributions are
taxable to shareholders as long-term capital gains, whether paid in cash or
reinvested in additional shares and regardless of the length of time a
particular shareholder has held Fund shares.
Any dividend or capital gains distribution has the effect of reducing the
net asset value of Fund shares held by a shareholder by the same amount as the
dividend or capital gains distribution. If the net asset value of the shares is
reduced below a shareholder's cost as a result of such a dividend or capital
gains distribution, the dividend or capital gains distribution, although
constituting a return of invested capital, would be taxable as described above.
Any gain or loss realized on the redemption of Fund shares by a shareholder who
is not a dealer in securities is treated as long-term capital gain or loss if
the shares have been held for more than one year, and otherwise as short-term
capital gain or loss. However, any loss realized by a shareholder upon the
redemption of shares in the Fund held one year or less is treated as a long-term
capital loss to the extent of any long-term capital gains distributions received
by the shareholder with respect to such shares.
Any short-term capital loss realized upon the redemption of shares within
six months from the date of their purchase is disallowed to the extent of any
tax-exempt dividends received during such period.
The Code provides that interest on indebtedness incurred, or continued, to
purchase or carry shares of the Fund is not deductible. Further, entities or
persons who may be "substantial users" (or persons related to "substantial
users") of facilities financed by industrial development bonds should consult
with their own tax advisors before purchasing shares of the Fund.
State and Local Taxes
The exemption for federal income tax purposes of dividends derived from
interest on municipal bonds does not necessarily result in an exemption under
the income or other tax laws of any state or local taxing authority.
Shareholders of the Fund may be exempt from state and local taxes on
distributions of tax-exempt interest income derived from obligations of the
state and/or municipalities of the state in which they may reside but may be
subject to tax on income derived from obligations of other jurisdictions.
Shareholders are advised to consult with their own tax advisors about the status
of distributions from the Fund in their own states and localities.
Under U.S. Treasury regulations, the Trust and each Eligible Institution
are 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.
Foreign Investors
The Fund is designed for investors who are either citizens of the United
States or aliens subject to United States income tax. Prospective investors
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<PAGE>
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
the Fund since alternative investments are available which would not be subject
to United States withholding tax.
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 the Fund's
fiscal year. Additional tax information is mailed to shareholders in January.
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
================================================================================
The Trust is an open-end management investment company organized on June 7,
1983, as an unincorporated business trust under the laws of the Commonwealth of
Massachusetts. Its offices are located at 6 St. James Avenue, Boston,
Massachusetts 02116; its telephone number is (617) 423-0800.
Pursuant to the Trust's Declaration of Trust, the Trustees have authorized
the issuance of an unlimited number of full and fractional shares of each series
of the Trust, one of which is the Fund. The Trustees may divide or combine the
shares into a greater or lesser number of shares without thereby changing the
proportionate beneficial interest in the Trust and may authorize the creation of
additional series of shares, the proceeds of which would be invested in
separate, independently managed portfolios. Currently, there are two series in
addition to the Fund.
The Trustees themselves have the power to alter the number and the terms of
office of the Trustees, to lengthen their own terms, or to make their terms of
unlimited duration subject to certain removal procedures, and to appoint their
own successors; provided that at least two-thirds of the Trustees have been
elected by the shareholders.
Each share of the Fund represents an equal proportional interest in the
Fund with each other share. Upon liquidation of the Fund, shareholders are
entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.
Shareholders of the Fund are entitled to a full vote for each full share
held and to a fractional vote for fractional shares. The voting rights of
shareholders are not cumulative. Shares have no preemptive or conversion rights.
The rights of redemption are described elsewhere herein. Shares when issued are
fully paid and nonassessable by the Trust, except as set forth below. It is the
intention of the Trust not to hold meetings of shareholders annually. The
Trustees may call meetings of shareholders for action by shareholder vote as may
be required by the 1940 Act or as may be permitted by the Declaration of Trust
or By-Laws. Shareholders have under certain circumstances (e.g., upon
application and submission of certain specified documents to the Trustees 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 Trustees. Shareholders also have the right to
remove one or more Trustees without a meeting by a declaration in writing by a
specified number of shareholders.
The By-Laws of the Trust provide that the presence in person or by proxy of
the holders of record of one half of the shares of the Fund 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
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<PAGE>
of the votes cast at any such meeting at which a quorum is present, except as
otherwise required by applicable law.
The Declaration of Trust provides that, at any meeting of shareholders of
the Fund, Brown Brothers Harriman & Co., as an Eligible Institution, may vote
any shares as to which Brown Brothers Harriman & Co. is the agent of record and
which are otherwise not represented in person or by proxy at the meeting,
proportionately in accordance with the votes cast by holders of all shares
otherwise represented at the meeting in person or by proxy as to which Brown
Brothers Harriman & Co. is the agent of record. Any shares so voted by Brown
Brothers Harriman & Co. are deemed represented at the meeting for purposes of
quorum requirements.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders of such a business trust
may, under certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss because
of shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.
ADDITIONAL INFORMATION
================================================================================
As used in this Prospectus, the term "majority of the Fund's outstanding
voting securities as defined in the 1940 Act" currently means the vote of (i)
67% or more of the Fund's shares present at a meeting, if the holders of more
than 50% of the outstanding voting securities of the Fund are present in person
or represented by proxy; or (ii) more than 50% of the Fund's 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.
A confirmation of each purchase and redemption transaction is issued on
execution of that transaction.
The Fund's performance may be used from time to time in shareholder reports
or other communications to shareholders or prospective investors. Performance
figures are based on historical earnings and are not intended to indicate future
performance. Performance information may include the Fund's investment results
and/or comparisons of its investment results to various unmanaged indexes (such
as the Lehman 3-Year General Obligation Municipal Bond Index or the Merrill
Lynch 0-3 Year General Obligation Municipal Bond Index). To the extent that
unmanaged indexes are so included, the same indexes are used on a consistent
basis. The Fund's investment results as used in such communications are
calculated on a total rate of return basis in the manner set forth below. From
time to time, fund rankings from various sources, such as Micropal, may be
quoted.
Period and average annualized "total rates of return" may be provided in
such communications. The "total rate of return" refers to the change in the
value of an investment in the Fund over a stated period based on any change in
net asset value per share and including the value of any shares purchasable with
any dividends or capital gains distributions during such period. Period total
rates of return may be annualized. An annualized total rate of return is a
compounded total rate of return which assumes that the period total rate of
return is generated over a one year period, and that all dividends and capital
gains distributions are reinvested. An annualized total rate of return is
slightly higher than a period total rate of return if the period is shorter than
one year, because of the assumed reinvestment.
The Fund's "yield", "effective yield" and "tax equivalent yield" may be
used from time to time in shareholder reports or other
communications to shareholders or prospective investors. Such yield
16
<PAGE>
figures are based on historical earnings and are not intended to indicate future
performance. The "yield" of the Fund refers to the income generated by an
investment in the Fund over a 30-day or one-month period (which period is
stated). This income is then annualized. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" is slightly higher than the
"yield" because of the compounding effect of this assumed reinvestment. The "tax
equivalent yield" is the yield a fully taxable investment would have to return
to an investor subject to the highest marginal federal tax rate to provide a
comparable return.
This Prospectus omits certain of the information contained in the Statement
of Additional Information and the Registration Statement filed with the
Securities and Exchange Commission. The Statement of Additional Information may
be obtained from 59 Wall Street Distributors without charge and the Registration
Statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the Rules and Regulations of the Commission.
17
<PAGE>
APPENDIX A
================================================================================
This Appendix is intended to provide descriptions of the securities the
Fund may purchase, the interest on which is exempt from federal income tax other
than the alternative minimum tax. However, other such securities not mentioned
below may be purchased for the Fund if they meet the quality and maturity
guidelines set forth in the Fund's investment policies.
================================================================================
Municipal Bonds--debt obligations issued by states, local governments and
regional authorities which provide interest income that is exempt from regular
federal income tax, other than the alternative minimum tax. They generally meet
the longer-term capital needs of their issuers and have maturities of one year
or more. These securities include:
o General Obligation Bonds--bonds backed by the municipality's pledge
of full faith, credit and taxing power.
o Revenue Bonds--bonds backed by the revenue of a specific project,
facility or tax. These include municipal water, sewer and power
utilities; transportation projects; education or housing facilities;
industrial development and resource recovery bonds.
o Refunded Bonds--general obligation or revenue bonds that have been
fully secured or collateralized by an "escrow fund" consisting of U.S.
Government obligations that can adequately meet interest and principal
payments.
o Lease Obligation Bonds--bonds backed by lease obligations of a state or
local authority for the use of land, equipment and facilities. These
securities are not backed by the full faith and credit of the
municipality and may be riskier than general obligation bonds or
revenue bonds. Leases and installment purchase or conditional sale
contracts have been developed to allow for government issuers to
acquire property without meeting the statutory and constitutional
requirements generally required for the issuance of debt.
o Asset-Backed Bonds--bonds secured by interests in pools of municipal
purchase contracts, financing leases and sales agreements. These
obligations are collateralized by the assets purchased or leased by the
municipality.
o Zero Coupon Bonds--securities issued at a discount from their face
value that pay all interest and principal upon maturity. The difference
between the purchase price and par is a specific compounded interest
rate for the investor. In calculating the daily income of the Fund, a
portion of the difference between a zero coupon bond's purchase price
and its face value is taken into account as income.
Municipal Notes--debt obligations issued by states, local governments and
regional authorities which provide interest income that is exempt from regular
federal income taxes, other than the alternative minimum tax. They generally
meet the shorter-term capital needs of their issuers and have maturities of less
than one year. These securities include:
o Tax and Revenue Anticipation Notes--notes issued in expectation of
future taxes or revenues.
o Bond Anticipation Notes--notes issued in anticipation of the sale of
long-term bonds.
Municipal Commercial Paper--obligations issued to meet short-term working
capital or operating needs.
18
<PAGE>
Variable and Floating Rate Instruments--securities whose interest rates are
reset daily, weekly or at another periodic date so that the security remains
close to par, minimizing changes in its market value. These securities often
have a demand feature which entitles the investor to repayment of principal plus
accrued interest on short notice. In calculating the maturity of a variable rate
or floating rate instrument for the Fund, the date of the next interest rate
reset is used.
When-issued and Delayed Delivery Securities--municipal securities may be
purchased for the Fund 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 Fund until delivery and
payment take place. At the time the commitment to purchase securities for the
Fund 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 Fund'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 Fund with liquid assets in an
amount at least equal to such commitments. Such segregated account consists of
liquid assets 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 Fund could, as with the disposition of
any other portfolio obligation, incur a gain or loss due to market fluctuation.
When-issued commitments for the Fund may not be entered into if such commitments
exceed in the aggregate 15% of the market value of the Fund's total assets, less
liabilities other than the obligations created by when-issued commitments.
19
<PAGE>
APPENDIX B
================================================================================
This Appendix is intended to provide descriptions of the short-term
securities the Fund may purchase, the interest on which is subject to federal
income tax. However, other such securities not mentioned below may be purchased
for the Fund if they meet the quality and maturity guidelines set forth in the
Fund's investment policies.
================================================================================
U.S. Government Obligations--Assets of the Fund 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) and
the U.S. Postal Service, 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.
Commercial Paper--Assets of the Fund 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 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 Fund's net assets.
Bank Obligations--Assets of the Fund may be invested in U.S.
dollar-denominated negotiable certificates of deposit, fixed time deposits and
bankers' acceptances 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 Board of Trustees. (See "Bond,
20
<PAGE>
Note and Commercial Paper Ratings" in the Statement of Additional Information.)
There is no 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. 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 Fund will not be invested in
obligations of Brown Brothers Harriman & Co. or the Distributor, or in the
obligations of the affiliates of any such organization or 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 Fund's total assets would be invested in such deposits.
Repurchase Agreements--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 seller (the
"Lender") of a security agrees to repurchase from the Fund 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 Fund 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 Fund 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 Fund always receives as
collateral securities which are issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. 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 Fund in each agreement along with accrued
interest. Payment for such securities is made for the Fund only upon physical
delivery or evidence of book entry transfer to the account of State Street Bank
and Trust Company, the Fund's Custodian. If the Lender defaults, the Fund 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 Fund 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 Fund if, as a result, more than
10% of the market value of the Fund's total assets would be invested in such
repurchase agreements together with any other investment being held for the Fund
for which market quotations are not readily available.
21
<PAGE>
The 59 Wall Street Trust
Investment Adviser and
Administrator
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Distributor
59 Wall Street Distributors, Inc.
6 St. James Avenue
Boston, Massachusetts 02116
No dealer, salesman or any other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus and the Statement of Additional Information, in connection with the
offer contained in this Prospectus, and if given or made, such other information
or representations must not be relied upon as having been authorized by the
Trust or the Distributor. This Prospectus does not constitute an offer by the
Trust or by the Distributor to sell or the solicitation of any offer to buy any
of the securities offered hereby in any jurisdiction to any person to whom it is
unlawful for the Trust or the Distributor to make such offer in such
jurisdiction.
