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PROSPECTUS
The 59 Wall Street Tax Exempt Money Fund
21 Milk Street, Boston, Massachusetts 02109
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The 59 Wall Street Tax Exempt Money 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 Fund is a type of mutual fund commonly known as a money market fund. It
is designed to be a cost effective and convenient means of making substantial
investments in money market instruments. The Fund's investment objective is to
achieve as high a level of current income exempt from federal income taxes as is
consistent with the preservation of capital and the maintenance of liquidity.
The net asset value of each of the Fund's shares is expected to remain constant
at $1.00. There can be no assurance that the investment objective of the Fund
will be achieved or that the net asset value per share will not vary.
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.
The Investment Adviser invests at least 80% of the Fund's assets in
securities the interest on which is exempt from federal income tax. The
Investment Adviser does not currently intend to invest the Fund's assets in
municipal securities whose interest is subject to federal income tax or in
municipal securities whose interest is subject to the federal alternative
minimum tax.
Brown Brothers Harriman & Co. is the investment adviser to, and the
administrator and shareholder servicing agent of the Fund. Shares of the Fund
are offered at net asset value without a sales charge.
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 February 16, 1999. This information
is incorporated herein by reference and is available without charge upon request
from the Fund's distributor, 59 Wall Street Distributors, Inc., 21 Milk Street,
Boston, Massachusetts 02109.
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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 February 16, 1999.
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TABLE OF CONTENTS
Page
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Expense Table ............................................................. 3
Investment Objective and Policies ......................................... 4
Investment Restrictions ................................................... 6
Purchase of Shares ........................................................ 6
Redemption of Shares ...................................................... 7
Management of the Trust ................................................... 8
Net Asset Value ........................................................... 11
Dividends and Distributions ............................................... 12
Taxes ..................................................................... 12
Description of Shares ..................................................... 14
Additional Information .................................................... 15
Appendix A ................................................................ 16
TERMS USED IN THIS PROSPECTUS
Trust ................................. The 59 Wall Street Trust
Fund .................................. The 59 Wall Street Tax Exempt Money 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................................. 0.15%
12b-1 Fee............................................. None
Other Expenses
Administration Fee ............................... 0.10%
Shareholder Servicing/Eligible Institution Fee.... 0.25
Expenses Reimbursement Fee........................ 0.15 0.50
---- ----
Total Fund Operating Expenses....................... 0.65%
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Example 1 year 3 years
------- ------ -------
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 $21
--- ---
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 expense payment agreement, 59 Wall Street
Administrators pays the Fund's expenses, other than fees paid to Brown Brothers
Harriman & Co. under the Corporation's Administration Agreement and other than
expenses relating to the organization of the Fund. If this expense payment
agreement was not in place, the "Other Expenses" would be expected to be 0.54%,
total Fund operating expenses would be expected to be 0.69% and the shareholder
expenses reflected in the example above would be $7 and $22, respectively for
the Fund. (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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INVESTMENT OBJECTIVE AND POLICIES
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The investment objective of the Fund is to achieve as high a level of
current income exempt from federal income taxes as is consistent with the
preservation of capital and the maintenance of 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.)
Also, as a fundamental policy, the Investment Adviser invests at least 80%
of the Fund's assets in securities the interest on which is exempt from federal
income tax. The investment policies of the Fund as described below are not
fundamental and may be changed without such approval. The Investment Adviser
does not currently intend to invest the Fund's assets in municipal securities
whose interest is subject to federal income tax or in municipal securities whose
interest is subject to the federal alternative minimum tax.
The Investment Adviser may invest more than 25% of the Fund's total assets
in securities that finance similar projects, such as those relating to
education, health care, transportation and utilities.
In buying and selling securities for the Fund, the Adviser complies with
industry-standard requirements for money market funds regarding the quality,
maturity and diversification of the Fund's investments. The Investment Adviser
stresses maintaining a stable $1.00 share price, liquidity and income.
Municipal securities are issued to raise money for a variety of public and
private purposes, including general financing for state and local governments,
or financing for a specific project or public facility. Municipal securities may
be fully or partially backed by the local government, by the credit of a private
issuer, by the current or anticipated revenues from a specific project or
specific assets, or by domestic or foreign entities providing credit support
such as letters of credit, guarantees or insurance. (See Appendix A for more
detail.)
Risk Factors
Many factors affect the Fund's performance. The Fund's yield will change
daily based on changes in interest rates and other market conditions. Although
the Fund is managed to maintain a stable $1.00 share price, there is no
guarantee that the Fund will be able to do so. For example, a major increase in
interest rates or a decrease in the credit quality of the issuer of one of the
Fund's investments could cause the Fund's share price to decrease. It is
important to note that neither the Fund nor its yield is guaranteed by the U.S.
Government.
The following factors may significantly affect the Fund's performance:
Municipal Market Volatility. Municipal securities can be significantly
affected by political changes as well as uncertainties in the municipal market
related to taxation, legislative changes, or the rights of municipal security
holders. Because many municipal securities are issued to finance similar types
of projects, especially those relating to education, health care, transportation
and utilities, conditions in those sectors can affect the overall municipal
market. In addition, changes in the financial condition of an individual
municipal insurer can affect the overall municipal market.
Interest Rate Changes. Money market securities have varying levels of
sensitivity to changes in interest rates. In general, the price of a money
market security can fall when interest rates rise and can rise when interest
rates fall. Securities with longer maturities and the securities of issuers in
the financial services industry can be more sensitive to interest rate changes.
Short-term securities tend to react to changes in short-term interest rates.
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Issuer-Specific Changes. 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. Municipal securities backed by current or anticipated
revenues from a specific project or specific assets can be negatively affected
by the discontinuance of the taxation supporting the project or assets or the
inability to collect revenues for the project or from the assets. If a
security's structure fails to function as intended, the security could become
taxable or decline in value.
In response to market, economic, political or other conditions, the Adviser
may temporarily use a different investment strategy for defensive purposes. If
the Adviser does so, different factors could affect the Fund's performance, and
the Fund may distribute income subject to federal income tax.
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.
On those occasions when Brown Brothers Harriman & Co. deems the purchase or
sale of a security to be in the best interests of the Fund 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 for the Fund with those to be sold or purchased for other
customers in order to obtain the 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 the most
equitable and consistent with its fiduciary obligations to its customers,
including the Fund. In some instances, this procedure might adversely affect the
Fund.
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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). Excluding the investment of all of
the Fund's assets in an open-end investment company with substantially the same
investment objective, policies and restrictions as the Fund, not more than 10%
of the net assets of the Fund may be invested in securities that are subject to
legal or contractual restrictions on resale. In addition, money is not borrowed
in an amount in excess of 331/3% 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.
As a non-fundamental policy, up to 5% of the Fund's assets may be invested
in repurchase agreements although it is the intention of the Investment Adviser
to do so only when other means of efficiently investing cash flows are
unavailable. All repurchase agreement transactions are collateralized by U.S.
Treasury securities and are entered into only with "primary dealers" (as
designated by the Federal Reserve Bank of New York) in U.S. Government
securities. A shareholder of the Fund is subject to state and local income taxes
in most jurisdictions on the portion of dividends received from the Fund which
is derived from income from repurchase agreements. It is the intention of the
Investment Adviser to minimize the portion of the Fund's income which is derived
from repurchase agreements to the extent practicable.
The Fund 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 and instrumentalities; and other securities
limited in respect of any one issuer to an amount no greater than 5% of the
Fund's total assets (other than securities issued by the U.S. Government, its
agencies or instrumentalities).
PURCHASE OF SHARES
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Shares of the Fund are offered on a continuous basis at their net asset
value without a sales charge. The Trust reserves the right to determine the
purchase orders for Fund shares that it will accept. 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. Shares are entitled to dividends declared, if any,
starting as of the next business day following the day a purchase order is
executed on the books of the Trust.
An investor who has an account with an Eligible Institution (see page 11)
or a Financial Intermediary (see page 10) may place purchase orders for Fund
shares with the Trust through that Eligible Institution or Financial
Intermediary, which holds such shares in its name on behalf of that customer
pursuant to arrangements made between that customer and that Eligible
Institution or Financial Intermediary. Each Eligible Institution and each
Financial Intermediary may establish and amend from time to time a minimum
initial and a minimum
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subsequent purchase requirement for its customers. Each Eligible Institution or
Financial Intermediary arranges payment for Fund shares on behalf of its
customers. A transaction fee may be charged by an Eligible Institution or a
Financial Intermediary on the purchase of Fund shares.
An investor who does not have an account with an Eligible Institution or a
Financial Intermediary must place purchase orders for Fund shares with the Trust
through the Fund's Shareholder Servicing Agent. Such an investor has such shares
held directly in the investor's name on the books of the Trust and is
responsible for arranging for the payment of the purchase price of Fund shares
to the Trust's account at State Street Bank and Trust Company, the Trust's
custodian bank. Such payment must be in the form of either (a) an inter-bank
wire transfer of "available funds" prior to 4:00 P.M., New York time, in which
case a purchase order placed prior to 4:00 P.M., New York time is executed that
day, or (b) a cashier's check drawn on a U.S. bank or a check certified by a
U.S. bank, in which case a purchase order is executed after such a check has
been converted into "available" funds, generally the next business day after the
check is received for the Trust by State Street Bank and Trust Company. Brown
Brothers Harriman & Co., as the Fund's Shareholder Servicing Agent, has
established a minimum initial purchase requirement for the Fund of $100,000 and
a minimum subsequent purchase requirement for the Fund of $25,000. These minimum
purchase requirements may be amended from time to time.
Inquiries regarding the manner in which purchases of Fund shares may be
effected and other matters pertaining to the Fund should be directed to Brown
Brothers Harriman & Co., the Fund's Shareholder Servicing Agent. (See back cover
for address and phone number.)
REDEMPTION OF SHARES
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A redemption request 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 next business day the redemption
request is executed, and in any event within seven days. A shareholder continues
to earn dividends declared, if any, through the business day a redemption
request is executed on the books of the Trust.
Shares held by an Eligible Institution or a Financial Intermediary on
behalf of a shareholder must be redeemed through that Eligible Institution or
Financial Intermediary pursuant to arrangements made between that shareholder
and that Eligible Institution or Financial Intermediary. Proceeds of a
redemption are paid to that shareholder's account at that Eligible Institution
or Financial Intermediary on a date established by the Eligible Institution or
Financial Intermediary. A transaction fee may be charged by an Eligible
Institution or a Financial Intermediary on the redemption of Fund shares.
Shares held directly in the name of a shareholder on the books of the Trust
may be redeemed by submitting a redemption request in good order to the Trust
through the Fund's Shareholder Servicing Agent. (See back cover for address and
phone number.) Proceeds resulting from such redemption are paid by the Trust
directly to the shareholder.
A shareholder redeeming shares should be aware that the net asset value of
the Fund's shares may, in unusual circumstances, decline below $1.00 per share.
Accordingly, a redemption request may result in payment of a dollar amount which
differs from the number of shares redeemed. (See "Net Asset Value".)
Redemptions By the Trust
The Fund's Shareholder Servicing Agent, each Eligible Institution and each
Financial Intermediary (see pages 10 and 11) may establish and amend
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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
meet the minimum requirement before the redemption is processed. Brown Brothers
Harriman & Co., as the Fund's Shareholder Servicing Agent, has established a
minimum account size of $100,000.
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.
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 to 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
Vice Chairman, Finance and Operations of The Interpublic Group
of Companies
David P. Feldman
Retired, Chairman and Chief Executive
Officer of AT&T Investment Management Corporation
Alan G. Lowy
President, Lowy Industries
Arthur D. Miltenberger
Retired, 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
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investments. Brown Brothers Harriman & Co. provides a broad range of investment
management services for customers in the United States and abroad. At December
31, 1998, it managed total assets of approximately $32 billion.
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 0.15% of the
Fund's average daily net assets. Brown Brothers Harriman & Co. also receives an
annual administration fee from the Fund equal to 0.10% of the Fund's average
daily net assets and an annual shareholder servicing/eligible institution fee
from the Fund equal to 0.25% of the average daily net assets of the Fund
represented by shares owned during the period by customers for whom Brown
Brothers Harriman & Co. is the holder or agent of record.
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 Trust 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,
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
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daily and payable monthly, equal to 0.10% 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 21 Milk Street, Boston,
Massachusetts 02109. 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.
Shareholder Servicing Agent
The Trust has entered into a shareholder servicing agreement with Brown
Brothers Harriman & Co. pursuant to which Brown Brothers Harriman & Co., as
agent for the Fund, among other things: answers inquiries from shareholders of
and prospective investors in the Fund regarding account status and history, the
manner in which purchases and redemptions of Fund shares may be effected and
certain other matters pertaining to the Fund; assists shareholders of and
prospective investors in the Fund in designating and changing dividend options,
account designations and addresses; and provides such other related services as
the Trust or a shareholder of or prospective investor in the Fund may reasonably
request. 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 shareholders who did not hold their
shares with an Eligible Institution.
Financial Intermediaries
From time to time, the Fund's Shareholder Servicing Agent enters into
contracts with banks, brokers and other financial intermediaries ("Financial
Intermediaries") pursuant to which a customer of the Financial Intermediary may
place purchase orders for Fund shares through that Financial Intermediary which
holds such shares in its name on behalf of that customer. Pursuant to such
contract, each Financial Intermediary as agent with respect to shareholders of
and prospective investors in the Fund who are customers of that Financial
Intermediary, 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, the Financial Intermediary receives such fees from the
Shareholder Servicing Agent as may be agreed upon from time to time between the
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Shareholder Servicing Agent and such Financial Intermediary.
Eligible Institutions
The Trust enters into eligible institution agreements with banks, brokers
and other financial institutions pursuant to which that financial institution as
agent for the Trust with respect to shareholders of and prospective investors in
the Fund who are customers of that financial institution 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, each financial
institution 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 the financial institution was the holder or agent of record.
Distributor
59 Wall Street Distributors acts as exclusive Distributor of shares of the
Fund. Its office is located at 21 Milk Street, Boston, Massachusetts 02109. 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 ("State Street" or the "Custodian"),
225 Franklin Street, P.O. Box 351, Boston, Massachusetts 02110, is the Fund's
Custodian, 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 ownership of the Fund's shares.
Independent Auditors
Deloitte & Touche LLP are the independent auditors for the Fund.
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
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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. It is anticipated that the net asset value per
share of the Fund will remain constant at $1.00. No assurance can be given that
this goal can be achieved.
The Fund'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 Fund's portfolio
securities 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 Fund would
receive if the security were sold. (See "Net Asset Value" in the Statement of
Additional Information.)
DIVIDENDS AND DISTRIBUTIONS
================================================================================
All the Fund's net income and short-term capital gains and losses, if any,
are declared as a dividend daily and paid monthly.
Net income of the Fund consists of (i) accrued interest, accretion of
discount and amortization of premium, (ii) plus net short-term capital gains or
losses realized on sales of portfolio securities of the Fund, and (iii) less the
accrued expenses of the Fund applicable to that dividend period. (See "Net Asset
Value".)
Determination of the Fund's net income is made immediately prior to the
determination of the net asset value per share 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. Net income for days other than such business days
is determined as of 4:00 P.M., New York time on the immediately preceding
business day. Dividends declared are payable to shareholders of record on the
date of determination. Shares purchased through submission of a purchase order,
prior to 4:00 P.M., New York time on such business day begin earning dividends
on the following business day. Shares redeemed qualify for a dividend on the
business day that the redemption is executed. (See "Redemption of Shares".)
Unless a shareholder whose shares are held directly in the shareholder's
name on the books of the Trust elects to have dividends paid in cash, dividends
are automatically reinvested in additional Fund shares without reference to the
minimum subsequent purchase requirement. Such shareholder who elects to have
dividends paid in cash receives a check in the amount of such dividends. 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.
Each Eligible Institution and each Financial Intermediary may establish its
own policy with respect to the reinvestment of dividends in additional Fund
shares.
TAXES
================================================================================
Each year, the Trust intends 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
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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 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
not intended, it is possible that the Fund may realize short-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.
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.
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.
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.
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 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.
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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 21 Milk Street, Boston, Massachusetts
02109; 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 three 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, 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 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, each Eligible Institution may vote any shares as to which that
Eligible Institution 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 that Eligible Institution is the agent
of record. Any shares so voted by an Eligible Institution 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
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<PAGE>
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.
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 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
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. The Fund's investment results
as used in such communications are calculated in the manner set forth below.
The "yield" of the Fund refers to the income generated by an investment in
the Fund 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 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.
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<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 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 397
days or less. 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.
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.
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. The Fund may purchase Municipal Bonds with a remaining maturity of 397
days or less. 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 Participation Certificates--the variable rate demand instruments that
the Fund may invest in include Participation Certificates purchased by
the Fund from banks, insurance companies or other financial
institutions in fixed or variable rate, tax-exempt municipal
obligations (expected to be concentrated in Revenue Bonds) owned by
such institutions or affiliated organizations. A Participation
Certificate gives the Fund an undivided interest in the municipal
obligation in the proportion that the Fund's participation interest
bears to the total principal amount of the municipal obligation and
provides the demand repurchase feature described below. Where the
institution issuing the participation does not meet the Fund's
eligibility criteria, the participation is backed by an
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<PAGE>
irrevocable letter of credit or guaranty of a bank (which may be the
bank that issued the Participation Certification, a bank issuing a
confirming letter of credit to that of the issuing bank, or a bank
serving as agent of the issuing bank with respect to the possible
repurchase of the certification of participation or a bank serving as
agent of the issuer with respect to the possible repurchase of the
issue) or insurance policy of an insurance company that the Board of
Trustees of the Fund has determined meets the prescribed quality
standards for the Fund. The Fund has the right to sell the
Participation Certificate back to the institution and, where
applicable, draw on the letter of credit, Guarantee or insurance after
no more than 30 days' notice either at any time or at specified
intervals no exceeding 397 days (depending on the terms of the
participation), for all or any part of the full principal amount of
the Fund's participation interest in the security, plus accrued
interest. The Fund intends to exercise the demand only (1) upon a
default under the terms of the bond documents, (2) as needed to
provide liquidity to the Fund in order to make redemptions of Fund
shares, or (3) to maintain a high quality investment portfolio. The
institutions issuing the Participation Certificates will retain a
service and letter of credit fee (where applicable) and a fee for
providing the demand repurchase feature, in an amount equal to the
excess of the interest paid on the instruments over the negotiated
yield at which the participations were purchased by the Fund. The
total fees generally range from 5% to 15% of the applicable prime.
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.
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
17
<PAGE>
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.
Other Federal Tax-Exempt Obligations--Any other Federal tax-exempt
obligations issued by or on behalf of states and municipal governments and their
authorities, agencies, instrumentalities and political subdivisions, whose
inclusion in the Fund would be consistent with the Fund's "Investment
Objectives, Policies and Risks" and permissable under Rule 2a-7 under the
Investment Company Act of 1940, as amended (the "1940 Act").
Stand-by Commitments--When the Fund purchases Municipal Obligations it may
also acquire stand-by commitments from banks and other financial institutions
which respect to such Municipal Obligations. Under a stand-by commitment, a bank
or broker-dealer agrees to purchase at the Fund's option a specified Municipal
Obligation at a specified price with same day settlement. A stand-by commitment
is the equivalent of a "put" option acquired by the Fund with respect to a
particular Municipal Obligation held in its portfolio.
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<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.
21 Milk Street
Boston, Massachusetts 02109
Shareholder Servicing Agent
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
(800) 625-5759
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.
59 WALL ST.
Tax Exempt Money Fund
PROSPECTUS
February 16, 1999
