As filed with the Securities and Exchange Commission on September 29, 2000.
Registration No. 33-39020
(The 59 Wall Street U.S. Treasury Money Fund
The 59 Wall Street Tax Exempt Money Fund)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 15
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 61
THE 59 WALL STREET TRUST
(Exact name of Registrant as specified in charter)
21 Milk Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (617)423-0800
PHILIP W. COOLIDGE
21 Milk Street, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copy to:
JOHN E. BAUMGARDNER, JR., ESQ.
Sullivan & Cromwell
125 Broad Street, New York, New York 10004
It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to pursuant to paragraph (b)
[ ] on pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a) i)
[ ] on pursuant to paragraph (a)(i)
[ ] 75 days afterfiling pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
(par value $.001)
<PAGE>
59 Wall Street
Money Market Fund
U.S. Treasury Money Fund
Tax Exempt Money Fund
Tax Free Short/Intermediate
Fixed Income Fund
Prospectus
October 1, 2000
<PAGE>
PROSPECTUS
The 59 Wall Street Money Market Fund
The 59 Wall Street U.S. Treasury Money Fund
The 59 Wall Street Tax Exempt Money Fund
The 59 Wall Street Tax Free Short/Intermediate Fixed Income Fund
21 Milk Street, Boston, Massachusetts 02109
The Money Market Fund, the U.S. Treasury Money Fund, the Tax Exempt Money
Fund and the Tax Free Short/Intermediate Fixed Income Fund are separate series
of The 59 Wall Street Trust. Shares of each Fund are offered by this Prospectus.
The Money Market Fund invests all of its assets in the BBH U.S. Money Market
Portfolio (the Portfolio).
Brown Brothers Harriman is the Investment Adviser for the U.S. Treasury
Money Fund, the Tax Exempt Money Fund, the Tax Free Short/Intermediate Fixed
Income Fund and the Portfolio and the administrator and shareholder servicing
agent of each Fund. Shares of each Fund are offered at net asset value without a
sales charge.
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.
The date of this Prospectus is October 1, 2000.
<PAGE>
TABLE OF CONTENTS
Page
-----
Investment Objective.................... 3
Principal Investment Strategies.......... 3
Principal Risk Factors .................. 4
Fund Performance ....................... 6
Fees and Expenses of the Funds ............ 7
Investment Adviser.......................... 8
Shareholder Information ................... 8
Financial Highlights....................... 12
Additional Investment Information .......... 15
<PAGE>
Brown Brothers Harriman provides four funds for investor's liquid assets.
They range from a U.S. Treasury Fund with maximum safety of principal to a Tax
Free Short/Intermediate Fixed Income Fund that has the greatest potential for
price volatility.
The net asset value of shares of each of the Money Market Fund, the U.S.
Treasury Money Fund and the Tax Exempt Money Fund is expected to remain constant
at $1.00 by investing in securities with a maturity of 13 months or less, and by
maintaining a dollar-weighted average maturity of 90 days or less. The share
price of the Tax Free Short/Intermediate Fixed Income Fund changes daily based
on market conditions.
<TABLE>
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
Invests in Investment may
NAV of $1.00 Invest only in Obligations be concentrated Risk
US Treasury of Foreign in a Industry or Potential
Obligations Banks Project
-------------------------------------------------------------------------------------------------------------
U.S. Treasury Fund X X Lowest
--------------------------------------------------------------------------------------------------------------
Money Market Fund X X X
-------------------------------------------------------------------------------------------------------------
Tax Exempt Money Fund X X
-------------------------------------------------------------------------------------------------------------
Tax Free Short/Intermediate
Fixed Income Fund X Highest
-------------------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT OBJECTIVE
The investment objective of the U.S. Treasury Money Fund and the Money Market
Fund is to provide investors with as high a level of income as is consistent
with the preservation of capital and the maintenance of liquidity. The
investment objective of the Tax Exempt Money Fund is to provide investors with
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 Tax Free Short/Intermediate Fixed Income 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.
PRINCIPAL INVESTMENT STRATEGIES
U.S. Treasury Money Fund
The Investment Adviser of the U.S. Treasury Money Fund invests only in
securities backed as to principal and interest payments by the full faith and
credit of the United States of America. These securities are issues of the U.S.
Treasury, such as bills, notes and bonds as well as other full faith and credit
obligations of the U.S. Government.
Money Market Fund
The Money Market Fund invests all of its assets in the BBH U.S. Money Market
Portfolio, an investment company that has the same investment objective as the
Fund. The Investment Adviser of the Portfolio invests only in short-term
instruments denominated in U.S. dollars. The Investment Adviser invests all of
the assets of the Portfolio in securities which, at the time of purchase, are
rated within the highest rating category for short-term debt obligations by at
least two (unless only rated by one) nationally recognized statistical rating
organizations (e.g., Moody's Investors Service, Inc., Standard & Poor's
Corporation and Fitch) (NRSRO) or, if unrated, are of comparable quality as
determined by or under the direction of the Portfolio's Board of Trustees.
Issues that do not carry a short-term rating but fall within the maturity
parameters of the Portfolio, must carry a long-term debt rating within the two
highest debt rating categories by at least two NRSROs. The instruments in which
the Investment Adviser may invest include U.S. Government securities and
obligations of U.S. and non-U.S. banks (such as certificates of deposit and
fixed time deposits), commercial paper, repurchase agreements, reverse
repurchase agreements, when-issued and delayed delivery securities, bonds issued
by U.S. corporations and obligations of certain supranational organizations.
Tax Exempt Money Fund
The Investment Adviser invests at least 80% of the Fund's assets in municipal
securities the interest on which is exempt from federal income tax and
alternative minimum tax. The Investment Adviser invests all of the Fund's assets
in securities which, at the time of purchase, are rated within the highest
rating category for short-term debt obligations by at least two (unless only
rated by one) NRSROs or, if unrated, are of comparable quality as determined by
or under the direction of the Fund's Board of Trustees. Issues that do not carry
a short-term rating but fall within the maturity parameters of the Fund, must
carry a long-term debt rating within the two highest debt rating categories by
at least two NRSROs. Municipal securities may be fully or partially guaranteed.
They may be guaranteed by a pool of underlying U.S. Treasuries (known as
"pre-refunded"), local governments or by the credit of a private issuer.
Municipal securities may also be guaranteed by the current or anticipated
revenues from a specific project or specific assets. Additionally, municipal
securities may be guaranteed by domestic or foreign entities providing credit
support such as letters of credit, guarantees or insurance. The Investment
Adviser may invest more than 25% of the Fund's total assets in tax-exempt
securities that finance similar projects, such as those relating to education,
health care, transportation and utilities.
Tax Free Short/Intermediate Fixed Income Fund
The Investment Adviser invests at least 80% of the Fund's assets in municipal
securities the interest on which is exempt from federal income tax and
alternative minimum tax. The Investment Adviser invests all of the Fund's assets
in securities which, at the time of purchase, are rated within the three highest
rating categories by at least two (unless only rated by one) NRSROs or, if
unrated, are of comparable quality as determined by or under the direction of
the Fund's Board of Trustees. Municipal securities may be fully or partially
guaranteed. They may be guaranteed by a pool of underlying U.S. Treasuries
(known as "pre-refunded"), local governments or by the credit of a private
issuer. Municipal securities may also be guaranteed by the current or
anticipated revenues from a specific project or specific assets. The securities
in which the Investment Adviser invests may include municipal bonds, notes,
commercial paper, variable and floating rate instruments and when-issued and
delayed delivery securities. The dollar weighted average maturity of the Fund's
portfolio is expected to be between one and three years.
PRINCIPAL RISK FACTORS
The principal risks of investing in each Fund are described below. A
shareholder may lose money by investing in the Funds. Market Risk, Interest Rate
Risk and Credit Risk discussed below are applicable to each Fund and the
Portfolio.
Market Risk:
The price of a debt security will fluctuate in response to changes in
interest rates.
Interest Rate Risk:
The amount of income paid to the shareholder by each Fund will fluctuate
depending on day-to-day variations in short-term interest rates. In general, the
prices of debt securities fall when interest rates rise. The Tax Free
Short/Intermediate Fixed Income Fund invests in longer term obligations which
are usually more sensitive to interest rate changes than the shorter-term
obligations in which the money market funds invest.
Credit Risk:
Credit risk refers to the likelihood that an issuer will default on interest
or principal payments. Changes in the financial condition of an issuer, changes
in specific economic or political conditions that affect a particular type of
issuer, and changes in general economic or political conditions can adversely
affect the credit quality or value of an issuer's securities. Entities providing
credit support, or a maturity-shortening structure, also can be affected by
these types of changes. 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. Because the Tax Exempt Money Fund and Tax Free
Short/Intermediate Fixed Income Fund may invest their assets in municipal
securities of issuers financing similar type projects, each Fund may be
adversely affected by a particular economic or political event affecting that
type project. Because the BBH U.S. Money Market Portfolio invests a significant
portion of its assets in bank obligations, the value of these investments and
the net assets of the Portfolio could decline more dramatically as a result of
adverse events affecting the bank industry.
Money Market Fund
Foreign Investment Risk:
Because the BBH U.S. Money Market Portfolio invests in securities issued by
non-U.S. banks, the Portfolio is subject to additional risks on these securities
such as adverse political, social and economic developments abroad, different
kinds and levels of market and issuer regulations and the different
characteristics of overseas economies and markets. There may be rapid changes in
the values of these securities.
[THE FOLLOWING TEXT APPEARS IN BOLDFACE IN PRINTED MATERIAL]:
Investments in each Fund are neither insured nor guaranteed by the U.S.
Government. Shares of each Fund are not deposits or obligations of, or
guaranteed by, Brown Brothers Harriman or any other bank, and the shares are not
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other federal, state or other governmental agency. Although the Money
Market Fund, U.S. Treasury Money Fund and Tax Exempt Money Fund seek to preserve
the value of your investment at $1.00 per share, it is possible to lose money by
investing in each Fund.
<PAGE>
Fund Performance
The chart and table below give an indication of the risks of investing in the
Money Market Fund, U.S. Treasury Money Fund, Tax Exempt Money Fund and Tax Free
Short/Intermediate Fixed Income Fund. The chart shows changes in each Fund's
performance from year to year. The table shows how the Tax Free
Short/Intermediate Fixed Income Fund's average annual returns for the periods
indicated compared to those of a broad measure of market performance. For
current yield information, please call 800-625-5759 toll free, or contact your
account representative. Since the Tax Exempt Money Fund has not been in
existence for a full calendar year, bar chart information is not included. When
you consider this information, please remember that a Fund's performance in past
years is not an indication of how a Fund will do in the future.
[Appears as Bar Chart in printed material]:
U.S. Treasury Money Money Market Tax Free Short/
Intermediate
1990 - 7.90 -
1991 - 6.00 -
1992 3.34 3.60 -
1993 2.60 2.81 5.91
1994 3.49 3.65 0.30
1995 5.18 5.59 7.17
1996 4.72 5.02 3.57
1997 4.76 5.16 3.98
1998 4.60 5.08 4.60
1999 4.06 4.80 0.83
As of September 30, 2000 the Money Market Fund, U.S. Treasury Money Fund,
Tax Exempt Money Fund and Tax Free Short/Intermediate Fixed Income Fund had
year-to-date returns of %, %, % and %, respectively.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Highest and Lowest Returns
(Quarterly 1993 - 1999)
----------------------------------------------------------------------------------------------------------------------------
Highest Return Lowest Return
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Quarter Quarter
% Ended % Ended
-------- ------------- -------- -------------
U.S. Treasury Money Fund...................... 1.31 Jun-95 0.61 Jun-93
Money Market Fund............................. 1.44 Jun-95 0.68 Jun-93
Tax Exempt Money Fund......................... 0.78 Jun-99 0.66 Sept-99
Tax Free Fixed Income Fund.................... 2.47 Mar-95 (0.94) Mar-94
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Average Annual Total Returns
(through December 31, 1999)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year 5 year 10 year Life of Fund
---------- ----------- ------------ --------------------
U.S. Treasury Money Fund*..................... 4.06 4.66 4.16 (since 03/12/91)
Money Market Fund*............................ 4.80% 5.13% 4.95% 6.00% (since 12/12/83)
Tax Exempt Money Fund......................... 2.35% (since 2/22/99)
1 year 5 year 10 year Life of Fund
---------- ----------- ------------ --------------------
Tax Free Fixed Income Fund.................... 0.83% 3.98% 3.83% (since 07/23/92)
Bond Buyer One-Year Note Index ............... 4.12 3.57 3.49 (since 07/23/92)
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Total returns are subject to federal income taxes at the stockholders
marginal tax rate, which may be as high as 39.6%.
</FN>
</TABLE>
<PAGE>
FEES AND EXPENSES OF THE FUNDS
The tables below describe the fees and expenses1 that an investor may pay if
that investor buys and holds shares of the Funds.
SHAREHOLDER FEES
(Fees paid directly from an Investor's account)
All Funds
-----------------
Maximum Sales Charge (Load)
Imposed on Purchases .............................................. None
Maximum Deferred Sales Charge (Load) ............................... None
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends.................................... None
Redemption Fee ..................................................... None
Exchange Fee ....................................................... None
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(Expenses that are deducted from Fund assets
as a percentage of average net assets)
<S> <C> <C> <C> <C>
Tax Free
Money U.S. Treasury Short/Intermediate Tax Exempt
Market Fund Money Fund Fixed Income Fund Money Fund
------------------------------------------------------------------------------
Management Fees ..................... 0.10% 0.15% 0.25% n/a
Distribution (12b-1) Fees............ None None None None
Other Expenses....................... 0.43 0.42 0.63 0.65
---- ---- ---- ----
Administration Fee......... 0.13% 0.100% 0.15% 0.10%
Shareholder Servicing/Eligible
Institution Fee ............... 0.25 0.225 0.25 n/a
Expense Payment Agreement......... n/a n/a n/a 0.55%2
----
Miscellaneous Expenses............ 0.05 0.095 0.23 n/a
---- ------ ---- ---
Total Annual Fund Operating
Expenses.......................... 0.53% 0.57% 0.88% 0.65%
==== ==== ==== ====
-------------------------------------------------------------------------------------------------------------------
<FN>
1The expenses shown for the Money Market Fund include the expenses of the BBH U.S. Money Market Portfolio.
2The expense payment arrangement is a contractual arrangement which limits the
total annual fund operating expenses to 0.65%. The arrangement will continue
until December 31, 2004. Included within the expense payment agreement is a
management fee of 0.15% and a shareholder servicing/eligible institution fee
of 0.25%.
</FN>
</TABLE>
<PAGE>
EXAMPLE
The example is intended to help an investor compare the cost of investing in
the Funds to the cost of investing in other mutual funds. The example assumes
that an investor invests $10,000 in the Funds for the time periods indicated and
then sells all of his shares at the end of those periods. The example also
assumes that an investment has a 5% return each year and that the Funds'
operating expenses remain the same as shown in the table above. Although actual
costs on an Investor's investment may be higher or lower, based on these
assumptions the Investor's costs would be:
<TABLE>
<S> <C> <C> <C> <C>
Money U.S. Treasury Tax Exempt Tax Free Short/Intermediate
Market Fund3 Money Fund Money Fund Fixed Income Fund
----------------------------------------------------------------------------------------
1 year ...................... $ 54 $ 58 $ 66 $ 90
3 years ..................... $170 $183 $208 $ 281
5 years ..................... $296 $318 $362 $ 488
10 years .................... $665 $714 $810 $1,084
--------------------------------------------------------------------------------------------------------------------
<FN>
3The example above reflect the expenses of both the Fund and the Portfolio.
</FN>
</TABLE>
INVESTMENT ADVISER
The Investment Adviser to the U.S. Treasury Money Fund, the Tax Exempt Money
Fund, the Tax Free Short/Intermediate Fixed Income Fund and BBH U.S. Money
Market Portfolio is Brown Brothers Harriman, Private Bankers, a New York limited
partnership established in 1818. The firm is subject to examination and
regulation by the Superintendent of Banks of the State of New York and by the
Department of Banking of the Commonwealth of Pennsylvania. The firm is also
subject to supervision and examination by the Commissioner of Banks of the
Commonwealth of Massachusetts. The Investment Adviser is located at 59 Wall
Street, New York, NY 10005.
The Investment Adviser provides investment advice and portfolio management
services to the Funds and the Portfolio. Subject to the general supervision of
the Trustees, the Investment Adviser makes the day-to-day investment decisions,
places the purchase and sale orders for the portfolio transactions, and
generally manages the investments. The Investment Adviser provides a broad range
of investment management services for customers in the United States and abroad.
At June 30, 2000, it managed total assets of approximately $35 billion.
A team of individuals manages all four Funds' portfolios on a day-to-day
basis. This team includes Mr. Jeffrey A. Schoenfeld, Mr. Glenn E. Baker, Ms.
Barbara A. Brinkley, Mr. John Ackler, Mr. Raymond Humphrey, Ms. Debra L. Croviez
and Mr. John C.G. Brownlie. Mr. Schoenfeld holds a B.A. from the University of
California, Berkeley and a M.B.A. from the Wharton School of the University of
Pennsylvania. He joined Brown Brothers Harriman in 1984. Mr. Baker holds a B.A.
and a M.B.A. from the University of Michigan and is a Chartered Financial
Analyst. He joined Brown Brothers Harriman in 1991. Ms. Brinkley holds a B.A.
from Smith College. She joined Brown Brothers Harriman in 1967. Mr. Ackler holds
a B.S. from Philadelphia University and a M.B.A. from Lehigh University. He
joined Brown Brothers Harriman in 1996. Prior to joining Brown Brothers
Harriman, he worked for Nomura Asset Management USA Inc. Mr. Humphrey holds a
B.A. from Montclair State College and a M.B.A. from New York University. He
joined Brown Brothers Harriman in 1991. Ms. Croviez holds a B.B.A. from George
Washington University. She joined Brown Brothers Harriman in 1997. Prior to
joining Brown Brothers Harriman, she worked for Republic National Bank. Mr.
Brownlie holds a B.A. from Wheaton College. He joined Brown Brothers Harriman in
1995.
As compensation for the services rendered and related expenses such as
salaries of advisory personnel borne by the Investment Adviser, under the
Investment Advisory Agreements, the Funds pay the Investment Adviser the
following annual fees, computed daily and payable monthly:
Percentage
of Average
Daily
Net Assets
--------------------
BBH U.S. Money Market Portfolio............ 0.10%
U.S. Treasury Money Fund................... 0.15%
Tax Exempt Money Fund...................... 0.15%
Tax Free Short/Intermediate Fixed
Income Fund............................. 0.25%
SHAREHOLDER INFORMATION
NET ASSET VALUE
The Trust determines the net asset value of each Fund every day the New York
Stock Exchange is open for regular trading and the Federal Reserve banks are
open for business. The U.S. Treasury Money Fund and Tax Exempt Money Fund each
calculate their net asset value once daily at 12:00 P.M., New York time. The BBH
U.S. Money Market Portfolio and the Tax Free Short/Intermediate Fixed Income
Fund each calculate their net asset value once daily at 4:00 P.M., New York
time. Net asset value is the value of a single share of a Fund.
It is anticipated that the net asset value per share of the Money Market
Fund, U.S. Treasury Money Fund and Tax Exempt Money Fund will remain constant at
$1.00. No assurance can be given that this goal can be achieved.
The Trust values the assets of the U.S. Treasury Money Fund, Tax Exempt Money
Fund and the Portfolio at amortized cost, which is approximately equal to market
value. The Trust values the assets in the Tax Free Short/Intermediate Fixed
Income Fund's portfolio on the basis of their market quotations and valuations
provided by independent pricing services. If quotations are not readily
available, the assets of the Tax Free Short/Intermediate Fixed Income Fund are
valued at fair value in accordance with procedures established by the Trustees
of the Trust.
PURCHASE OF SHARES
The Trust offers shares of each Fund on a continuous basis at its net asset
value without a sales charge. The Trust reserves the right to determine the
purchase orders for Fund shares that it will accept. Investors may purchase
shares on any day the net asset value is calculated if the Trust receives the
purchase order, including acceptable payment for such order, prior to such
calculation. The Trust then executes purchases of Fund shares at the net asset
value per share next determined. Shares of the Money Market Fund, U.S. Treasury
Money Fund and Tax Exempt Money Fund are entitled to dividends declared on the
day the Trust executes the purchase order on the books of the Trust. Shares of
the Tax Free Short/Intermediate Fixed Income Fund are entitled to dividends
declared on the next business day following the day the Trust executes the
purchase order on the books of the Trust.
An investor who has an account with an Eligible Institution or a Financial
Intermediary may place purchase orders for Fund shares 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 subsequent purchase requirement for its customers
which currently is as low as $1,000. Each Eligible Institution or Financial
Intermediary arranges payment for Fund shares on behalf of its customers. An
Eligible Institution or a Financial Intermediary may charge a transaction fee 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 Brown Brothers Harriman, the Funds' 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. The Trust executes all purchase orders for initial and
subsequent purchases at the net asset value per share next determined after the
Trust's Custodian, Brown Brothers Harriman, has received payment in the form of
a cashier's check drawn on a U.S. bank, a check certified by a U.S. bank or a
wire transfer. The Funds' Shareholder Servicing Agent has established a minimum
initial purchase requirement for each Fund of $100,000 and a minimum subsequent
purchase requirement for each Fund of $25,000. The Shareholder Servicing Agent
may amend these minimum purchase requirements from time to time.
Redemption of Shares
The Trust executes your redemption request at the next net asset value
calculated after the Trust receives your redemption request. Shares of the Money
Market Fund, U.S. Treasury Money Fund and Tax Exempt Money Fund continue to earn
daily dividends declared prior to the business day that the Trust executes the
redemption request on the books of the Trust. Shares of the Tax Free
Short/Intermediate Fixed Income Fund continue to earn dividends declared through
the business day that the Trust executes the redemption request on the books of
the Trust.
Shareholders must redeem shares held by an Eligible Institution or a
Financial Intermediary on behalf of such shareholder pursuant to arrangements
made between that shareholder and that Eligible Institution or Financial
Intermediary. The Trust pays proceeds of a redemption to that shareholder's
account at that Eligible Institution or Financial Intermediary on a date
established by the Eligible Institution or Financial Intermediary. An Eligible
Institution or a Financial Intermediary may charge a transaction fee on the
redemption of Fund shares.
Shareholders may redeem shares held directly in the name of a shareholder on
the books of the Trust by submitting a redemption request in good order to the
Trust through the Shareholder Servicing Agent. The Trust pays proceeds resulting
from such redemption directly to shareholders of the Money Market Fund, U.S.
Treasury Money Fund and Tax Exempt Money Fund generally on the day the
redemption request is executed, and in any event within seven days. The Trust
pays proceeds resulting from such redemption directly to shareholders of the Tax
Free Short/Intermediate Fixed Income Fund generally on the next business day
after the redemption request is executed, and in any event within seven days.
A shareholder redeeming shares should be aware that the net asset value of
the shares of the Money Market Fund, U.S. Treasury Money Fund and Tax Exempt
Money Fund 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.
Redemptions by the Trust
The Shareholder Servicing Agent has established a minimum account size of
$100,000 for the Funds, which may be amended from time to time. If the value of
a shareholder's holdings in a Fund falls below that amount because of a
redemption of shares, the Trust may redeem the shareholder's remaining shares.
If such remaining shares are to be redeemed, the Trust notifies the shareholder
and allows the shareholder 60 days to make an additional investment to meet the
minimum requirement before the redemption is processed. Each Eligible
Institution and each Financial Intermediary may establish and amend from time to
time for their respective customers a minimum account size, each of which is
currently lower than that established by the Shareholder Servicing Agent.
Further Redemption Information
Redemptions of shares are taxable events on which a shareholder may realize a
gain or a loss.
The Trust may suspend a shareholder's right to receive payment with respect
to any redemption or postpone the payment of the redemption proceeds for up to
seven days and for such other periods as applicable law may permit.
Dividends and Distributions
The net income and short-term capital gains and losses of the Money Market
Fund, U.S. Treasury Money Fund and Tax Exempt Money Fund, if any, are declared
as a dividend daily and paid monthly. All of the Tax Free Short/Intermediate
Fixed Income Fund's net investment income and a discretionary portion of any net
short-term capital gains are declared as a dividend daily and paid monthly.
Determination of each Fund's net income is made each business day immediately
prior to the determination of the net asset value per share of each Fund. Net
income for days other than such business days is determined at the time of the
determination of the net asset value per share of each Fund on the immediately
preceding business day.
Each Eligible Institution and each Financial Intermediary may establish its
own policy with respect to the reinvestment of dividends in additional Fund
shares.
Dividends declared are payable to shareholders of record of the Funds on the
date of determination. For the U.S. Treasury Money Fund and Tax Exempt Money
Fund, shares purchased through submission of a purchase order prior to 12:00
P.M., New York time on such a business day begin earning dividends on that
business day. For the Money Market Fund, shares purchased through submission of
a purchase order prior to 4:00 P.M., New York time on such a business day begin
earning dividends on that business day. Shares redeemed do not qualify for a
dividend on the business day that the redemption is executed. For the Tax Free
Short/Intermediate Fixed Income Fund, shares purchased through submission of a
purchase order prior to 4:00 P.M., New York time on such a business day begin
earning dividends on the next business day. Shares redeemed do qualify for a
dividend on the business day that the redemption is executed. Unless a
shareholder whose shares are held directly in the shareholder's name on the
books of the Trust elects to have dividends paid in cash, the Trust
automatically reinvests dividends 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. There
are no sales charges for the reinvestment of dividends
Substantially all of the Tax Free Short/Intermediate Fixed Income 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. The Trust may
make an additional dividend and/or capital gains distribution in a given year to
the extent necessary to avoid the imposition of federal excise tax on the Fund.
Taxes
Dividends of net income and net short-term capital gains, if any, are taxable
to shareholders of the Money Market Fund and U.S. Treasury Money Fund as
ordinary income, whether such dividends are paid in cash or reinvested in
additional shares.
The Tax Exempt Money Fund and the Tax Free Short/Intermediate Fixed Income
Fund expect that most of their net income will be attributable to interest on
municipal obligations and as a result most of the Funds' dividends to
shareholders will not be taxable. The non-exempt portion of dividends are
taxable to shareholders of the Funds as ordinary income, whether such dividends
are paid in cash or reinvested in additional shares.
The Tax Free Short/Intermediate Fixed Income Fund's capital gains may be
taxable at different rates depending on the length of time the Fund holds its
assets. 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.
The treatment of each Fund and its shareholders in those states which have
income tax laws might differ from treatment under the federal income tax laws.
Therefore, distributions to shareholders may be subject to additional state and
local taxes. Shareholders are urged to consult their tax advisors regarding any
state or local taxes.
Foreign Investors
Each 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
Funds since alternative investments would not be subject to United States
withholding tax.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help an investor understand the
financial performance of the Funds. Certain information reflects financial
results for a single Fund share. The total returns in the tables represent the
rate that an investor would have earned on an investment in each Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Deloitte & Touche LLP, whose report, along with the Funds' financial
statements, are included in the annual report, which is available upon request.
<TABLE>
Money Market Fund
For the years ended June 30,
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year ..... $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income .............. 0.05 0.05 0.05 0.05 0.05
Dividends to shareholders from net
investment income ................... (0.05) (0.05) (0.05) (0.05) (0.05)
------ ------ ------ ------ ------
Net asset value, end of year ........... $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total return (1) ....................... 5.36% 4.77% 5.22% 5.07% 5.33%
Ratios/supplemental data (2):
Net assets, end of period
(000's omitted)...................... $1,421,982 $1,074,741 $937,790 $917,536 $763,972
Ratio of expenses to average
net assets (1)..................... 0.53% 0.53% 0.55% 0.55% 0.55%
Ratio of net investment income
to average net assets ............. 5.29% 4.66% 5.11% 4.96% 5.14%
---------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Had the expense reimbursement agreement, which commenced July 1, 1993, not
been in place, the ratio of expenses to average net assets for the years
ended June 30, 1997 and 1996, would have been 0.55% and 0.56%, respectively.
For the same periods, the total return of the Fund would have been 5.07% and
5.32%, respectively. The expense reimbursement agreement was terminated on
July 1, 1997.
(2)Ratios include the Fund's share of Portfolio income and expenses, as appropriate.
</FN>
</TABLE>
<PAGE>
<TABLE>
U.S. Treasury Money Fund
For the years ended June 30,
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2000 1999 1998 1997 1996
----------- ---------- ---------- ---------- ----------
Net asset value, beginning of year...... $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income................ 0.05 0.04 0.05 0.04 0.04
Dividends to shareholders from
net investment income............ (0.05) (0.04) (0.05) (0.04) (0.04)
------- ------ ------ ------- ------
Net asset value, end of year............ $1.00 $1.00 $1.00 $1.00 $1.00
====== ===== ===== ===== =====
Total return (1)........................ 4.75% 4.15% 4.78% 4.75% 4.96%
Ratios/Supplemental data:
Net assets, end of period
(000's omitted)...................... $134,425 $193,222 $194,694 $160,458 $146,225
Ratio of expenses to average net
assets(1) ........................... 0.57% 0.62% 0.56% 0.55% 0.56%
Ratio of net investment income to
average net assets(1)................ 4.68% 4.07% 4.70% 4.65% 4.78%
------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)Had the expense reimbursement agreement, which commenced July 1, 1993, not
been in place, the ratio of expenses to average net assets for the year ended
June 30, 1996 would have been 0.57%. For the same period, the total return
would have been 4.91%. The expense reimbursement agreement terminated on
February 1, 1996.
</FN>
</TABLE>
<PAGE>
<TABLE>
Tax Exempt Money Fund
<S> <C> <C>
For the period from
February 22, 1999
(commencement of
For the year ended operations) to
June 30, 2000 June 30, 1999
------------- -------------------
Net asset value, beginning of period..................................... $1.00 $1.00
Income from investment operations:
Net investment income ................................................ 0.03 0.01
Dividends to shareholders from
net investment income................................................ (0.03) (0.01)
------ ------
Net asset value, end of period........................................... $1.00 $1.00
===== =====
Total return(1) ...................................................... 3.05% 1.03%
Ratios/Supplemental data:
Net assets, end of period (000's omitted)............................. $173,050 $14,654
Expenses as a percentage of average net assets(1) .................... 0.65% 0.65%(2)
Ratio of net investment income to average net assets 3.24% 2.63%
<FN>
(1) Had the expense payment agreement not been in place, the ratio of expenses to average net assets and total return would
be as follows:
Expenses paid by the Fund........................................... 0.62% 1.23%(2)
Expense offset arrangement ......................................... 0.03% 0.05%(2)
---- ----
Total Expenses..................... 0.65% 1.28%(2)
==== ====
(2) Annualized.
</FN>
</TABLE>
<PAGE>
<TABLE>
Tax Free Short/Intermediate Fixed Income Fund
For the years ended June 30,
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of year........ $10.30 $10.40 $10.33 $10.26 $10.28
Income from investment operations:
Net investment income ................. 0.34 0.35 0.36 0.37 0.37
Net realized and unrealized
gain (loss) on investments........... (0.06) (0.10) 0.07 0.07 (0.02\)
Less dividends and distributions:
Dividends to shareholders from
net investment income................ (0.34) (0.35) (0.36) (0.37) (0.37)
------ ------ ------ ------ ------
Net asset value, end of year.............. $10.24 $10.30 $10.40 $10.33 $10.26
====== ====== ====== ====== ======
Total return.............................. 2.88% 2.44% 4.25% 4.34% 3.60%
Ratios/Supplemental data:
Net assets, end of year
(000's omitted)........................ $78,310 $75,719 $80,160 $55,714 $44,776
Ratio of expenses to average net
assets:(2)
Total expenses paid by the Fund........ 0.85% 0.82% 0.78% 0.70%(1) 0.70%(1)
Expense offset arrangement............. 0.03% 0.01% 0.02% n/a n/a
---------- ---- ---- --- ---
Net expenses 0.88% 0.83% 0.80% 0.70% 0.70%
Ratio of net investment income to
average net assets .................. 3.29% 3.37% 3.49% 3.55% 3.51%
Portfolio turnover rate .................. 22% 44% 20% 48% 48%
---------------------------------------------------------------------------------------------------------------------------
<FN>
(1)Had the expense payment agreement not been in place, the ratio of expenses to
average net assets for the years ended June 30, 1997and 1996 would have been
0.96% and 0.90%, respectively. For the same periods, the total return of the
Fund would have been 4.16% and 3.40%, respectively. The expense payment
agreement terminated on July 1, 1997.
</FN>
</TABLE>
<PAGE>
ADDITIONAL INVESTMENT INFORMATION
Money Market Fund
Investment Structure. The Trust seeks to achieve the investment objective of
the Money Market Fund by investing all of the Fund's assets in the Portfolio, a
diversified open-end investment company having the same investment objective as
the Fund. Other mutual funds or institutional investors may invest in the
Portfolio on the same terms and conditions as the Fund. However, these other
investors may have different operating expenses which may generate different
aggregate performance results. The Trust may withdraw the Fund's investment in
the Portfolio at any time as a result of changes in the Portfolio's investment
objective, policies or restrictions or if the Board of Trustees determines that
it is otherwise in the best interests of the Fund to do so.
Investment Securities. Eligible investments include the following:
U.S. Government Securities. The Portfolio may invest in securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities. These
securities, including those which are guaranteed by federal agencies or
instrumentalities, may or may not be backed by the "full faith and credit" of
the United States.
Bank Obligations. The Portfolio may invest in U.S. dollar-denominated
high quality securities. These securities include negotiable certificates of
deposit and fixed time deposits of banks, savings and loan associations and
savings banks organized under the laws of the United States or any state
thereof. The Portfolio's investments also include obligations of non-U.S.
branches of such banks, or of non-U.S. banks or their U.S. or non-U.S. branches.
(The Portfolio may only invest in obligations of such non-U.S. banks if such
bank has more than $500 million in total assets).
Commercial Paper. The Portfolio may invest in commercial paper including
variable rate demand master notes issued by U.S. corporations or by non-U.S.
corporations which are direct parents or subsidiaries of U.S. corporations.
Master notes are demand obligations that permit the investment of fluctuating
amounts at varying market rates of interest pursuant to arrangements between the
issuer and a U.S. commercial bank acting as agent for the payees of such notes.
Master notes are callable on demand, but are not marketable to third parties.
Consequently, the right to redeem such notes depends on the borrower's ability
to pay on demand.
Repurchase Agreements. A repurchase agreement is an agreement in which the
seller (the Lender) of a security agrees to repurchase from the Portfolio the
security sold at a mutually agreed upon time and price. As such, it is viewed as
the lending of money to the Lender. The Portfolio always receives as collateral
securities which are eligible securities for the Portfolio to purchase.
Other Obligations. Assets of the Portfolio may be invested in bonds and
asset-backed securities, with maturities not exceeding thirteen months, issued
by U.S. corporations. Assets of the Portfolio may also be invested in
obligations of the International Bank for Reconstruction and Development which
may be supported by appropriated but unpaid commitments of its member countries,
although there is no assurance that these commitments will be undertaken in the
future. However, assets of the Portfolio may not be invested in obligations of
the Inter-American Development Bank or the Asian Development Bank.
Tax Exempt Money Fund and Tax Free Short/Intermediate Fixed Income Fund
The following information describes the securities each Fund may purchase,
the interest on which is exempt from federal income tax and the alternative
minimum tax. However, other such securities not mentioned below may be purchased
for each Fund if they meet the quality and maturity guidelines set forth in each
Fund's investment policies.
Municipal Bonds. 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 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 Tax
Exempt Money Funds may purchase Municipal Bonds with a remaining maturity of 397
days or less. These securities include:
General Obligation Bonds-bonds backed by the municipality's pledge of
full faith, credit and taxing power.
<PAGE>
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.
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.
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.
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.
Zero Coupon Bonds-securities issued at a discount from their face value
that pay all interest and principal upon maturity.
Participation Certificates-variable rate demand instruments that the Tax
Exempt Money Fund may invest in include Participation Certificates purchased by
such Fund from banks, insurance companies or other financial institutions in
fixed or variable rate, tax-exempt municipal obligations (expected to be focused
in Revenue Bonds) owned by such institutions or affiliated organizations. A
participation certificate represents the sale by the bank of an undivided
interest in a municipal obligation it owns. These certificates may be supported
by a bank letter of credit or guarantee.
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 Tax Exempt Money Fund would be consistent with such Fund's
Investment Objectives, Investment Strategies, and permissable under Rule 2a-7
under the Investment Company Act of 1940 as amended.
Stand-by Commitments-When the Tax Exempt Money Fund purchases Municipal
Obligations it may also acquire stand-by commitments from banks and other
financial institutions with respect to such Municipal Obligations. Under a
stand-by commitment, a bank or broker-dealer agrees to purchase at such Fund's
option a specified Municipal Obligation at a specified price with same day
settlement.
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:
Tax and Revenue Anticipation Notes-notes issued in expectation of future
taxes or revenues.
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.
<PAGE>
The 59 Wall Street
Money Market Fund
SEC file number: 811-03779
The 59 Wall Street
U.S. Treasury Money Fund
SEC file number: 811-03779
The 59 Wall Street Tax Exempt Money Fund SEC file number: 811-03779
The 59 Wall Street
Tax Free Short/Intermediate Fixed Income Fund
SEC file number: 811-03779
More information on each Fund is available free
upon request, including the following:
Annual/Semi-Annual Report
Describes the Funds' performance, lists portfolio holdings and contains a letter
from the Funds' Investment Adviser discussing recent market conditions, economic
trends and Fund strategies that significantly affected the Funds' performance
during its last fiscal year.
Statement of Additional Information
Provides more details about each Fund and its policies. A current SAI is on file
with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus). To obtain information
or make shareholder inquiries:
By telephone
1-800-625-5759
By mail write to the Funds' Shareholder Servicing Agent:
Brown Brothers Harriman
59 Wall Street
New York, NY 10005
By E-mail send your request to:
[email protected]
On the Internet:
Text-only versions of Fund documents can be viewed online or downloaded from:
Brown Brothers Harriman
http://www.bbhco.com
SEC
http://www.sec.gov
You can also review or obtain copies by visiting the SEC's Public Reference Room
in Washington, D.C. or by sending your request and a duplicating fee to the
SEC's Public Reference Section, Washington, D.C. 20549-0102. Information on the
operations of the Public Reference Room may be obtained by calling
1-202-942-8090. Additionally, this information is available on the EDGAR
database at the SEC's internet site at http://www.sec.gov. A copy may be
obtained, after paying a duplicating fee, by electronic request at the following
e-mail address: [email protected].
<PAGE>
WS5039N
STATEMENT OF ADDITIONAL INFORMATION
THE 59 WALL STREET U.S. TREASURY MONEY FUND
21 Milk Street, Boston, Massachusetts 02109
The 59 Wall Street U.S. Treasury Money Fund (the "Fund") is a separate
diversified series of The 59 Wall Street Trust (the "Trust"), organized as a
Massachusetts business trust on June 7, 1983 a management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Fund is a type of mutual fund commonly known as a money market fund.
The Fund 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 as is consistent with
the preservation of capital and the maintenance of liquidity. There can be no
assurance that the investment objective of the Fund will be achieved. The Trust
pursues the investment objective of the Fund by investing in short-term
obligations backed as to principal and interest payments by the full faith and
credit of the United States of America. Although investments held for the Fund
are issued by the U.S. Government, an investment in the Fund is not insured or
guaranteed by the U.S. Government
The Annual Report of the Fund dated June 30, 2000 has been filed with
the Securities and Exchange Commission pursuant to Section 30(b) of the 1940 Act
and Rule 30b2-1 thereunder and is hereby incorporated herein by reference. A
copy of the Annual Report will be provided, without charge, to each person
receiving this Statement of Additional Information.
Brown Brothers Harriman & Co. is the investment adviser of the Fund
(the "Investment Adviser"). This Statement of Additional Information is not a
prospectus and should be read in conjunction with the Prospectus dated October
1, 2000, a copy of which may be obtained from the Trust at the address noted
above.
The date of this Statement of Additional Information is October 1, 2000,
<TABLE>
<CAPTION>
Table of Contents
<S> <C> <C>
Cross-Reference to
Page Page in Prospectus
Investments
Investment Objective and Policies . . . . . 3 3-4
Investment Restrictions . . . . . . . . 4
Management
Trustees and Officers . . . . . 6
Investment Adviser . . . . . . . . . . 10 6
Administrators. . . . . . . . . . . . 11
Distributor . . . . . . . . . . . . 13
Shareholder Servicing Agent,
Financial Intermediaries and Eligible Institutions 13-14
Custodian, Transfer and Dividend Disbursing
Agent 14
</TABLE>
<TABLE>
<CAPTION>
Table of Contents
<S> <C> <C>
Cross-Reference to
Page Page in Prospectus
Independent Auditors 15
Net Asset Value; Redemption in Kind . . . . 16 6
Computation of Performance . . . . . . . 16
Purchases and Redemptions 17
Federal Taxes . . . . . . . . . . . . 18-20
Description of Shares . . . . . . . . . 20
Portfolio Brokerage Transactions . . . . 23
Additional Information. . . . . . . . . . . . . . . 23
Financial Statements . . . . . . . . . 24
The date of this Statement of Additional Information is October 1, 2000,
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The following supplements the information contained in the Prospectus
concerning the investment objective, policies and techniques of the Fund.
Treasury Receipts
Assets of the Fund are not invested in stripped securities issued by
any entity other than the U.S. Treasury.
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 will
assets of the Fund be 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 have 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 Brown Brothers Harriman & Co.
(the "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.
Reverse Repurchase Agreements
Reverse repurchase agreements may also be entered into for the Fund,
although the current intention is not to do so.
Loans of Portfolio Securities
Securities of the Fund may be loaned if such loans would be secured
continuously by cash or equivalent collateral or by an irrevocable letter of
credit in favor of the Fund at least equal at all times to 100% of the market
value of the securities loaned plus accrued income. While such securities are on
loan, the borrower pays the Fund any income accruing thereon, and cash
collateral may be invested for the Fund, thereby earning additional income. All
or any portion of interest earned on invested collateral may be paid to the
borrower. Loans are subject to termination by the Trust in the normal settlement
time, currently three business days after notice, or by the borrower on one
day's notice. Borrowed securities are returned when the loan is terminated. Any
appreciation or depreciation in the market price of the borrowed securities
which occurs during the term of the loan inures to the Fund and its
shareholders. Reasonable finders' and custodial fees may be paid in connection
with a loan. In addition, all facts and circumstances, including the
creditworthiness of the borrowing financial institution, are considered before a
loan is made and no loan is made in excess of one year. There is the risk that a
borrowed security may not be returned to the Fund. Securities of the Fund are
not loaned to Brown Brothers Harriman & Co. or to any affiliate of the Trust or
Brown Brothers Harriman & Co.
INVESTMENT RESTRICTIONS
The Fund is operated under the following investment restrictions which
are deemed fundamental policies and may be changed only with the approval of the
holders of a "majority of the Fund's outstanding voting securities" (as defined
in the 1940 Act) (see "Additional Information").
Except that the Trust may invest all of the Fund's assets in an
open-end investment company with substantially the same investment objective,
policies and restrictions as the Fund, the Trust, with respect to the Fund, may
not:
(1) borrow money or mortgage or hypothecate its assets, except that in
an amount not to exceed 1/3 of the current value of its net assets, it may
borrow money as a temporary measure for extraordinary or emergency purposes and
enter into repurchase agreements, and except that it may pledge, mortgage or
hypothecate not more than 1/3 of such assets to secure such borrowings (it is
intended that money be borrowed only from banks and only either to accommodate
requests for the redemption of Fund 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) or reverse repurchase agreements, and except that assets may
be pledged to secure letters of credit solely for the purpose of participating
in a captive insurance company sponsored by the Investment Company Institute;
(2) purchase any security or evidence of interest therein on margin,
except that such short-term credit as may be necessary for the clearance of
purchases and sales of securities may be obtained;
(3) write, purchase or sell any put or call option or any combination
thereof;
(4) underwrite securities issued by other persons except insofar as it
may technically be deemed an underwriter under the Securities Act of 1933, as
amended in selling a portfolio security;
(5) make loans to other persons except (a) through the lending of its
portfolio securities and provided that any such loans not exceed 30% of its
total net assets (taken at market value), (b) through the use of repurchase
agreements or the purchase of short-term obligations and provided that not more
than 10% of its total assets are invested in repurchase agreements maturing in
more than seven days, or (c) by purchasing, subject to the limitation in
paragraph 6 below, a portion of an issue of debt securities of types commonly
distributed privately to financial institutions, for which purposes the purchase
of a portion of an issue of debt securities which are part of an issue to the
public shall not be considered the making of a loan;
(6) knowingly invest in securities which are subject to legal or
contractual restrictions on resale (other than repurchase agreements maturing in
not more than seven days) if, as a result thereof, more than 10% of the its
total assets (taken at market value) would be so invested (including repurchase
agreements maturing in more than seven days);
(7) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the freedom of action to hold and to sell real
estate acquired as a result of the ownership of securities is reserved);
(8) make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment of
any further consideration, for securities of the same issue and equal in amount
to, the securities sold short, and unless not more than 10% of its net assets
(taken at market value) is represented by such securities, or securities
convertible into or exchangeable for such securities, at any one time (it is the
present intention of management to make such sales only for the purpose of
deferring realization of gain or loss for federal income tax purposes);
(9) concentrate its investments in any particular industry, but if it
is deemed appropriate for the achievement of its investment objective, up to 25%
of its assets, at market value at the time of each investment, may be invested
in any one industry; or
(10) issue any senior security (as that term is defined in the 1940
Act) if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder.
Non-Fundamental Restrictions. The Fund may not as a matter of operating
policy (except that the Fund may invest all of the Fund's assets in an open-end
investment company with substantially the same investment objective, policies
and restrictions as the Fund): (i) purchase securities of any investment company
if such purchase at the time thereof would cause more than 10% of its total
assets (taken at the greater of cost or market value) to be invested in the
securities of such issuers or would cause more than 3% of the outstanding voting
securities of any such issuer to be held; (ii) invest more than 5% of the Fund's
assets in repurchase agreements although it is the intention of the Adviser to
do so only when other means of efficiently investing cash flows are unavailable;
or (ii) invest more than 10% of its net assets (taken at the greater of cost or
market value) in restricted securities. These policies are not fundamental and
may be changed without shareholder approval.
Percentage and Rating Restrictions. If a percentage or rating
restriction on investment or utilization of assets set forth above or referred
to in the Prospectus is adhered to at the time an investment is made or assets
are so utilized, a later change in percentage resulting from changes in the
value of the portfolio securities or a later change in the rating of a portfolio
security is not considered a violation of policy.
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).
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.
The Trustees and executive officers of the Trust, their principal
occupations during the past five years (although their titles may have varied
during the period) and business addresses are:
TRUSTEES OF THE TRUST
J.V. SHIELDS, JR.* (aged 62) - Chairman of the Board and Trustee;
Director of The 59 Wall Street Fund, Inc.; Trustee of the BBH Portfolios(1)
(since October 1999); Director of BBH Common Settlement Fund, Inc. (since August
2000); Managing Director, Chairman and Chief Executive Officer of Shields &
Company; Chairman of Capital Management Associates, Inc.; Director of Flowers
Industries, Inc.(2). Vice Chairman and Trustee of New York Racing Assocation.
His business address is Shields & Company, 140 Broadway, New York, NY 10005.
EUGENE P. BEARD** (aged 65) - Trustee; Director of The 59 Wall Street
Fund, Inc.; Trustee of the BBH Portfolios (since October 1999); Director of BBH
Common Settlement Fund, Inc. (since August 2000); Executive Vice President -
Finance and Operations of The Interpublic Group of Companies. His business
address is The Interpublic Group of Companies, Inc., 1271 Avenue of the
Americas, New York, NY 10020.
DAVID P. FELDMAN** (aged 60) - Trustee; Director of The 59 Wall Street
Fund, Inc.; Trustee of the BBH Portfolios (since October 1999); Director of BBH
Common Settlement Fund, Inc. (since August 2000); Retired; Vice President and
Investment Manager - AT&T Investment Management Corporation (prior to October
1997); Director of Dreyfus Mutual Funds, Jeffrey Co. and Heitman Financial. His
business address is 3 Tall Oaks Drive, Warren, NJ 07059.
ALAN G. LOWY** (aged 61) - Trustee; Director of The 59 Wall Street
Fund, Inc.; Trustee of the BBH Portfolios (since October 1999); Director of BBH
Common Settlement Fund, Inc. (since August 2000); Private Investor; Secretary of
the Los Angeles County Board of Investments (prior to March 1995). His business
address is 4111 Clear Valley Drive, Encino, CA 91436.
ARTHUR D. MILTENBERGER** (aged 61) - Trustee; Director of The 59 Wall
Street Fund, Inc.; Trustee of the BBH Portfolios (since October 1999); Director
of BBH Common Settlement Fund, Inc. (since August 2000); Retired, Executive Vice
President and Chief Financial Officer of Richard K. Mellon and Sons (prior to
June 1998); Treasurer of Richard King Mellon Foundation (prior to June 1998);
Vice President of the Richard King Mellon Foundation; Trustee, R.K. Mellon
Family Trusts; General Partner, Mellon Family Investment Company IV, V and VI;
Director of Aerostructures Corporation (since 1996) (2). His business address is
Richard K. Mellon and Sons, P.O. Box RKM, Ligonier, PA 15658.
RICHARD L. CARPENTER (aged 67) - Trustee (since October 1999); Trustee
of the BBH Portfolios; Trustee of Dow Jones Islamic Market Index Portfolio
(since March 1999); Director of The 59 Wall Street Fund, Inc. (since October
1999); Director of BBH Common Settlement Fund, Inc. (since August 2000);
Retired; Director of Investments, Pennsylvania Public School Employees'
Retirement System (prior to December 1997). His business address is 12664 Lazy
Acres Court, Nevada City, CA 95959.
CLIFFORD A. CLARK (aged 70) - Trustee (since October 1999); Trustee of
the BBH Portfolios; Trustee of Dow Jones Islamic Market Index Portfolio (since
March 1999); Director of The 59 Wall Street Fund, Inc. (since October 1999);
Director of BBH Common Settlement Fund, Inc. (since August 2000); Retired. His
business address is 42 Clowes Drive, Falmouth, MA 02540.
DAVID M. SEITZMAN (aged 71) - Trustee (since October 1999); Trustee of
the BBH Portfolios; Director of The 59 Wall Street Fund, Inc. (since October
1999); Director of BBH Common Settlement Fund, Inc. (since August 2000);
Physician, Private Practice. His business address is 7117 Nevis Road, Bethesda,
MD 20817.
J. ANGUS IVORY (aged 68) - Trustee (since October 1999); Trustee of the
BBH Portfolios (since October 1999); Director of The 59 Wall Street Fund, Inc.
(since October 1999); Trustee of Dow Jones Islamic Market Index Portfolio (since
March 1999); Director of BBH Common Settlement Fund, Inc. (since August 2000);
Retired; Director of Brown Brothers Harriman Ltd., subsidiary of Brown Brothers
Harriman & Co.; Director of Old Daily Saddlery; Advisor, RAF Central Fund;
Committee Member, St. Thomas Hospital Pain Clinic (since 1999).
OFFICERS OF THE TRUST
PHILIP W. COOLIDGE (aged 49) - President; President of the BBH
Portfolios; Chief Executive Officer and President of Signature Financial Group,
Inc. ("SFG"), 59 Wall Street Distributors, Inc. ("59 Wall Street Distributors")
and 59 Wall Street Administrators, Inc. ("59 Wall Street Administrators").
JAMES E. HOOLAHAN (aged 53) - Vice President; Senior Vice President of
SFG.
LINWOOD C. DOWNS (aged 38) -Treasurer; Treasurer of the BBH Portfolios;
Senior Vice President and Treasurer of SFG; and Treasurer of 59 Wall Street
Administrators and 59 Wall Street Distributors.
MOLLY S. MUGLER (aged 48) - Secretary; Secretary of the BBH Portfolios;
Legal Counsel and Secretary of SFG; Secretary of 59 Wall Street Distributors and
59 Wall Street Administrators.
SUSAN JAKUBOSKI (aged 36) - Assistant Treasurer; Assistant Treasurer of
the BBH Portfolios; Assistant Secretary, Assistant Treasurer and Vice President
of Signature Financial Group (Cayman) Limited; and Assistant Treasurer of 59
Wall Street Administrators and 59 Wall Street Distributors.
CHRISTINE D. DORSEY (aged 30) - Assistant Secretary; Assistant
Secretary of the BBH Portfolios; Vice President of SFG (since January 1996);
Paralegal and Compliance Officer, various financial companies (July 1992 to
January 1996).
----------------------
* Mr. Shields is an "interested person" of the Trust because of his affiliation
with a registered broker-dealer.
** These Trustees are members of the Audit Committee of the Trust.
(1) The BBH Portfolios consist of the following active investment
companies: BBH U.S. Money Market Portfolio, BBH International Equity
Portfolio, BBH U.S. Equity Portfolio, BBH European Equity Portfolio,
BBH Pacific Basin Equity Portfolio, BBH High Yield Fixed Income
Portfolio, BBH Broad Market Fixed Income Portfolio and BBH Global
Equity Portfolio and the following inactive investment companies: BBH
U.S. Balanced Growth Portfolio and BBH U.S. Intermediate Tax-Exempt
Bond Portfolio.
(2) Shields & Company, Capital Management Associates, Inc. and Flowers
Industries, Inc., with which Mr. Shields is associated, are a
registered broker-dealer and a member of the New York Stock Exchange, a
registered investment adviser, and a diversified food company,
respectively.
(3) Richard K. Mellon and Sons, Richard King Mellon Foundation, R.K. Mellon
Family Trusts, Mellon Family Investment Company IV, V and VI and
Aerostructures Corporation, with which Mr. Miltenberger is or has been
associated, are a private foundation, a private foundation, a trust, an
investment company and an aircraft manufacturer, respectively.
Each Trustee and officer listed above holds the equivalent position
with The 59 Wall Street Fund, Inc. The address of each officer is 21 Milk
Street, Boston, Massachusetts 02109. Messrs. Coolidge, Hoolahan and Downs, and
Mss. Jakuboski, Mugler and Dorsey also hold similar positions with other
investment companies for which affiliates of 59 Wall Street Distributors serve
as the principal underwriter.
Except for Mr. Shields, no Trustee is an "interested person" of the
Trust as that term is defined in the 1940 Act.
<PAGE>
<TABLE>
<CAPTION>
Trustees of the Trust and the Portfolio
The Trustees of the Trust and the Portfolio receive a base annual fee
of $15,000 (except the Chairmen who receive a base annual fee of $20,000) and
such base annual fee is allocated among all series of the Trust, all series of
The 59 Wall Street Fund, Inc. and the Portfolios and any other active Portfolios
having the same Board of Trustees based upon their respective net assets. In
addition, each series of the Trust and The 59 Wall Street Fund, Inc., the
Portfolios and any other active Portfolios which has commenced operations pays
an annual fee to each Trustee of $1,000.
<S> <C> <C> <C> <C>
Pension or Total
Aggregate Retirement Compensation
Compensation Benefits Accrued Estimated Annual from Fund
Name of Person, from the Fund as Part of Benefits upon Complex Paid
Position Complex* Fund Expenses Retirement to Trustees
J.V. Shields, Jr., $14,685 none none $35,000
Trustee
Eugene P. Beard, $12,013 none none $30,000
Trustee
Richard L. Carpenter, $8,001 none none $30,000
Trustee
Clifford A. Clark, $8,001 none none $30,000
Trustee
David P. Feldman, $12,013 none none $30,000
Trustee
J. Angus Ivory, $8,001 none none $30,000
Trustee
Alan G. Lowy, $12,013 none none $30,000
Trustee
Arthur D. Miltenberger, $12,013 none none $30,000
Trustee
David M. Seitzman, $8,001 none none $30,000
Trustee
<FN>
* The Fund Complex consists of the Trust, The 59 Wall Street Fund, Inc. (which currently consists of seven
series) and the seven Portfolios.
</FN>
</TABLE>
By virtue of the responsibilities assumed by Brown Brothers Harriman &
Co. under the Investment Advisory Agreement and the Administration Agreement
(see "Investment Adviser" and "Administrator"), the Trust itself requires no
employees other than its officers, and none of its officers devote full time to
the affairs of the Trust or, other than the Chairman, receive any compensation
from the Fund.
As of August 31, 2000, the Trust's Trustees and officers as a group owned
less than 1% of the Fund's outstanding shares of the Trust. At the close of
business on that date, no person, to the knowledge of management, owned
beneficially more than 5% of the outstanding shares of the Fund except Mr.
Joseph McNay owned 17,448,001 (12.98%) shares, Lillard Partners owned 11,282,200
(8.39%) and American Saw and Manufacturing Co. owned 8,663,207 (6.44%) shares,
c/o Brown Brothers Harriman & Co., 59 Wall Street, New York, New York 10005. As
of that date, the Partners of Brown Brothers Harriman & Co. and their immediate
families owned 1,692,267 (1.02%) shares of the Fund. Brown Brothers Harriman &
Co. and its affiliates separately have investment discretion over an additional
15,647,071 (9.43%) shares of the Fund, as to which Brown Brothers Harriman & Co.
disclaims beneficial ownership.
INVESTMENT ADVISER
Under its Investment Advisory Agreement with the Trust, subject to the
general supervision of the Trust's Trustees and in conformance with the stated
policies of the Fund, Brown Brothers Harriman & Co. provides investment advice
and portfolio management services to the Fund. In this regard, it is the
responsibility of Brown Brothers Harriman & Co. to make the day-to-day
investment decisions for the Fund, to place the purchase and sale orders for
portfolio transactions of the Fund and to manage, generally, the Fund's
investments.
The Investment Advisory Agreement between Brown Brothers Harriman & Co.
and the Trust is dated February 12, 1991, as amended and restated November 1,
1993 and remains in effect for two years from such date and thereafter, but only
as long as the agreement is specifically approved annually (i) by a vote of the
holders of a "majority of the Fund's outstanding voting securities" (as defined
in the 1940 Act) or by the Trust's Trustees, and (ii) by a vote of a majority of
the Trustees of the Trust who are not parties to the Investment Advisory
Agreement or "interested persons" (as defined in the 1940 Act) of the Trust
("Independent Trustees"), cast in person at a meeting called for the purpose of
voting on such approval. The Investment Advisory Agreement was most recently
approved by the Independent Trustees on November 9, 1999. The Investment
Advisory Agreement terminates automatically if assigned and is terminable at any
time without penalty by a vote of a majority of the Trustees of the Trust or by
a vote of the holders of a "majority of the Fund's outstanding voting
securities" (as defined in the 1940 Act) on 60 days' written notice to Brown
Brothers Harriman & Co. and by Brown Brothers Harriman & Co. on 90 days' written
notice to the Trust (see "Additional Information").
The investment advisory fee paid to the Investment Adviser is
calculated daily and paid monthly at an annual rate equal to 0.15% of the Fund's
average daily net assets. For the fiscal years ended June 30, 2000, 1999, and
1998, the Fund incurred $253,594, $308,367, and $278,914, respectively, for
advisory services.
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.
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.
The Administration Agreement between the Trust and Brown Brothers
Harriman & Co. (dated November 1, 1993) will remain in effect for two years from
such date and thereafter, but only so long as such agreement is specifically
approved at least annually in the same manner as the Investment Advisory
Agreement. The Independent Trustees of the Trust most recently approved the
Trust's Administration Agreement on November 9, 1999. The agreement will
terminate automatically if assigned by either party thereto and is terminable at
any time without penalty by a vote of a majority of the Trustees of the Trust or
by a vote of the holders of a "majority of the outstanding voting securities"
(as defined in the 1940 Act) of the Trust (see "Additional Information"). The
Administration Agreement is terminable by the Trust's Trustees or shareholders
of the Trust on 60 days' written notice to Brown Brothers Harriman & Co. and by
Brown Brothers Harriman & Co. on 90 days' written notice to the Trust.
The administrative fee paid to Brown Brothers Harriman & Co. is
calculated daily and payable monthly at an annual rate equal to 0.10% of the
Fund's average daily net assets. For the fiscal years ended June 30, 2000, 1999,
and 1998, the Fund incurred $169,063, $205,578, and $185,942, respectively, for
administrative services.
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.
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.
The Distribution Agreement (dated August 31, 1990) between the Trust
and 59 Wall Street Distributors remains in effect for two years from its date of
execution and thereafter indefinitely, but only so long as the continuance of
such agreement is specifically approved at least annually in conformity with the
requirements of the 1940 Act. The Distribution Agreement was most recently
approved by the Independent Trustees of the Trust on February 8, 2000. The
agreement terminates automatically if assigned by either party thereto and is
terminable with respect to the Fund at any time without penalty by a vote of a
majority of the Trustees of the Trust or by a vote of the holders of a "majority
of the Fund's outstanding voting securities" (as defined in the 1940 Act). The
Distribution Agreement is terminable with respect to the Fund by the Trust's
Trustees or shareholders of the Fund on 60 days' written notice to 59 Wall
Street Distributors. The agreement is terminable by 59 Wall Street Distributors
on 90 days' written notice to the Trust.
59 Wall Street Distributors holds itself available to receive purchase
orders for Fund shares.
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 0.225% 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
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 0.225% 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.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, is the Fund's Custodian. 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.
Forum Shareholder Services, LLC, Two Portland Square, Portland, ME 04101
is the Transfer and Dividend Disbursing Agent for the Fund. The Transfer and
Dividend Disbursing Agent 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.
CODE OF ETHICS
The Trust, the Adviser and the Distributor each have adopted a code of
ethics pursuant to Rule 17j-1 under the 1940 Act. Each code of ethics permits
personnel subject to such code of ethics to invest in securities, including
securities that may be purchased or held by the Fund. However, the codes of
ethics contain provisions and requirements designed to identify and address
certain conflicts of interest between personal investment activities and the
interests of the Fund. Of course, there can be no assurance that the codes of
ethics will be effective in identifying and addressing all conflicts of interest
relating to personal securities transactions. The code of ethics of the Trust,
the Adviser and the Distributor are on file with and are available from the SEC
(See "Additional Information" below).
NET ASSET VALUE
The net asset value of each of the Fund's shares is determined each day
the New York Stock Exchange is open for regular trading and New York banks are
open for business. (As of the date of this Statement of Additional Information,
such Exchange and banks are so open every weekday except for the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day,
Thanksgiving Day and Christmas.) This determination of net asset value of each
share of the Fund is made once during each such day as of the close of regular
trading on such Exchange by subtracting from the value of the Fund's total
assets 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 of each share of the Fund will remain
constant at $1.00 and, although no assurance can be given that it will be able
to do so on a continuing basis, the Trust employs specific investment policies
and procedures to accomplish this result.
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.
Pursuant to a rule of the Securities and Exchange Commission, an
investment company may use the amortized cost method of valuation subject to
certain conditions and the determination that such method is in the best
interests of its shareholders. The use of amortized cost valuations for the Fund
is subject to the following conditions: (i) as a particular responsibility
within the overall duty of care owed to the Fund's shareholders, the Trustees
have established procedures reasonably designed, taking into account current
market conditions and the Fund's investment objective, to stabilize the net
asset value per share as computed for the purpose of distribution and redemption
at $1.00 per share; (ii) the procedures include periodic review by the Trustees,
as they deem appropriate and at such intervals as are reasonable in light of
current market conditions, of the relationship between the net asset value per
share using amortized cost and the net asset value per share based upon
available indications of market value with respect to such portfolio securities;
(iii) the Trustees will consider what steps, if any, should be taken if a
difference of more than 1/2 of 1% occurs between the two methods of valuation;
and (iv) the Trustees will take such steps as they consider appropriate, such as
changing the dividend policy, shortening the average portfolio maturity,
realizing gains or losses, establishing a net asset value per share by using
available market quotations, or reducing the value of the Fund's outstanding
shares, to minimize any material dilution or other unfair results which might
arise from differences between the two methods of valuation.
Such conditions also generally require that: (i) investments for the
Fund be limited to instruments which the Trustees determine present minimal
credit risks and which are of high quality as determined by any nationally
recognized statistical rating organization that is not an affiliated person of
the issuer of, or any issuer, guarantor or provider of credit support for, the
instrument, or, in the case of any instrument that is not so rated, is of
comparable quality as determined by the Investment Adviser under the general
supervision of the Trustees; (ii) a dollar-weighted average portfolio maturity
of not more than 90 days be maintained appropriate to the Fund's objective of
maintaining a stable net asset value of $1.00 per share and no instrument is
purchased with a remaining maturity of more than 13 months; (iii) the Fund's
available cash will be invested in such a manner as to reduce such maturity to
90 days or less as soon as is reasonably practicable, if the disposition of a
portfolio security results in a dollar-weighted average portfolio maturity of
more than 90 days; and (iv) no more than 5% of the Fund's total assets may be
invested in the securities of any one issuer (other than U.S. Government
securities).
It is expected that the Fund will have a positive net income at the
time of each determination thereof. If for any reason the Fund's net income is a
negative amount, which could occur, for instance, upon default by an issuer of a
portfolio security, the Fund would first offset the negative amount with respect
to each shareholder account from the dividends declared during the month with
respect to those accounts. If and to the extent that negative net income exceeds
declared dividends at the end of the month, the Fund would reduce the number of
outstanding Fund shares by treating each shareholder as having contributed to
the capital of the Fund that number of full and fractional shares in his or her
account which represents his or her share of the amount of such excess. Each
shareholder would be deemed to have agreed to such contribution in these
circumstances by his or her investment in the Fund.
COMPUTATION OF PERFORMANCE
The current and effective yields of the Fund may be used from time to
time in shareholder reports or other communications to shareholders or
prospective investors. Seven-day current yield is computed by dividing the net
change in account value (exclusive of capital changes) of a hypothetical
pre-existing account having a balance of one share at the beginning of a
seven-day calendar period by the value of that account at the beginning of that
period, and multiplying the return over the seven-day period by 365/7. For
purposes of the calculation, net change in account value reflects the value of
additional shares purchased with dividends from the original share and dividends
declared on both the original share and any such additional shares, but does not
reflect realized gains or losses or unrealized appreciation or depreciation. The
Fund's current yield for the seven-day calendar period ended June 30, 2000 was
5.14%. In addition, the Trust may use an effective annualized yield quotation
for the Fund computed on a compounded basis by adding 1 to the base period
return (calculated as described above), raising the sum to a power equal to
365/7, and subtracting 1 from the result. Based upon this latter method, the
Fund's effective annualized yield for the seven-day calendar period ended June
30, 2000 was 5.27%.
The yield should not be considered a representation of the yield of the
Fund in the future since the yield is not fixed. Actual yields depend on the
type, quality and maturities of the investments held for the Fund, changes in
interest rates on investments, and the Fund's expenses during the period.
Yield information may be useful for reviewing the performance of the
Fund and for providing a basis for comparison with other investment
alternatives. However, unlike bank deposits or other investments which pay a
fixed yield for a stated period of time, the Fund's yield does fluctuate, and
this should be considered when reviewing performance or making comparisons.
The Fund's "yield" and "effective yield" may be used from time to time
in shareholder reports or other communications to shareholders or prospective
investors. Both yield figures are based on historical earnings and are not
intended to indicate future performance. Performance information may include 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 Funds' investment results as used in such communications are
calculated in a 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.
PURCHASES AND REDEMPTIONS
A confirmation of each purchase and redemption transaction is issued on
execution of that transaction.
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's right to receive payment with respect to any redemption
may be suspended or the payment of the redemption proceeds postponed: (i) during
periods when the New York Stock Exchange is closed for other than weekends and
holidays or when regular trading on such Exchange is restricted as determined by
the Securities and Exchange Commission by rule or regulation, (ii) during
periods in which an emergency exists which causes disposal of, or evaluation of
the net asset value of, the Fund's portfolio securities to be unreasonable or
impracticable, or (iii) for such other periods as the Securities and Exchange
Commission may permit.
An investor should be aware that redemptions from the Fund may not be
processed if a completed account application with a certified taxpayer
identification number has not been received.
In the event a shareholder redeems all shares held in 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.
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.
FEDERAL 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
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Under Subchapter M of the Code the Fund is not subject to federal income taxes
on amounts distributed to 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.
Qualification as a regulated investment company under the Code
requires, among other things, that (a) at least 90% of the Fund's annual gross
income, without offset for losses from the sale or other disposition of
securities, be derived from interest, payments with respect to securities loans,
dividends and gains from the sale or other disposition of securities or other
income derived with respect to its business of investing in such securities; (b)
less than 30% of the Fund's annual gross income be derived from gains (without
offset for losses) from the sale or other disposition of securities held for
less than three months; and (c) the holdings of the Fund be diversified so that,
at the end of each quarter of its fiscal year, (i) at least 50% of the market
value of the Fund's assets be represented by cash, U.S. Government securities
and other securities limited in respect of any one issuer to an amount not
greater than 5% of the Fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of the Fund's
assets be invested in the securities of any one issuer (other than U.S.
Government securities). In addition, in order not to be subject to federal
income tax, at least 90% of the Fund's net investment income and net short-term
capital gains earned in each year must be distributed to the Fund's
shareholders.
To maintain a constant $1.00 per share net asset value, the Trustees
may direct that the number of outstanding shares be reduced pro rata. If this
adjustment is made, it will reflect the lower market value of portfolio
securities and not realized losses.
Other Taxes. Assets of the Fund are invested in direct obligations of the
U.S. Government, the interest from which is specifically exempted from state and
local income taxes when held directly by taxpayers. All states by legislation or
regulation allow the character of interest income from direct obligations of the
U.S. Government received by a regulated investment company organized as a series
of a Massachusetts business trust, such as the Fund, to pass through to
shareholders. However, 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 Trust
intends to advise shareholders of the proportion of the Fund's dividends which
is derived from interest on direct obligations of the U.S. Government.
<TABLE>
<CAPTION>
Dividends paid from the Fund which are derived from interest on direct
obligations of the U.S. Government are generally expected to be exempt from
income taxation in the District of Columbia and the following states:
<S> <C> <C>
Alabama Maine Ohio
Arizona Maryland Oklahoma
Arkansas Massachusetts Oregon
Colorado Michigan Pennsylvania
Delaware Minnesota Rhode Island
Georgia Missouri South Carolina
Hawaii Mississippi Tennessee
Idaho Montana Utah
Illinois Nebraska Vermont
Indiana New Hampshire Virginia
Iowa New Jersey West Virginia
Kansas New Mexico Wisconsin.
Kentucky North Carolina
Louisiana North Dakota
</TABLE>
Such dividends are also generally expected to be so exempt in the
following states provided that a certain minimum percentage of the Fund's assets
consist of direct obligations of the U.S. Government. It is the Trust's
intention to meet these minimum percentage requirements, none of which is
greater than 50%.
California Connecticut New York.
There is currently no state income tax in the following states:
Alaska South Dakota Washington
Florida Texas Wyoming.
Nevada
Shareholders are urged to consult their tax advisors regarding the possible
exclusion for state and local income tax purposes of the portion of dividends
paid from the Fund which is derived from interest on direct obligations of the
U.S. Government.
Other Information. Dividends of net income and net short-term gains, if
any, are taxable to shareholders of the Fund as ordinary income, whether such
dividends are paid in cash or reinvested in additional shares. These
distributions are not eligible for the dividends-received deduction allowed to
corporate shareholders.
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.
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.
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 21 Milk Street,
Boston, Massachusetts 02109; its telephone number is (617) 423-0800. The Trust's
Declaration of Trust permits the Trust's Board of Trustees to issue an unlimited
number of full and fractional shares of beneficial interest and to divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the Trust. Each Fund share
represents an equal proportionate interest in the Fund with each other share.
Upon liquidation or dissolution of the Fund, the Fund's shareholders are
entitled to share pro rata in the Fund's net assets available for distribution
to its shareholders. Shares of each series participate equally in the earnings,
dividends and assets of the particular series. Shares of each series are
entitled to vote separately to approve advisory agreements or changes in
investment policy, but shares of all series vote together in the election or
selection of Trustees, principal underwriters and auditors for the Trust. Upon
liquidation or dissolution of the Trust, the shareholders of each series are
entitled to share pro rata in the net assets of their respective series
available for distribution to shareholders. The Trust reserves the right to
create and issue additional series of shares. The Trust currently consists of
four series.
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 are entitled to one vote for each share held on matters on
which they are entitled to vote. Shareholders in the Trust do not have
cumulative voting rights, and shareholders owning more than 50% of the
outstanding shares of the Trust may elect all of the Trustees of the Trust if
they choose to do so and in such event the other shareholders in the Trust would
not be able to elect any Trustee. The Trust is not required and has no current
intention to hold meetings of shareholders annually but the Trust will hold
special meetings of shareholders when in the judgment of the Trust's Trustees it
is necessary or desirable to submit matters for a shareholder vote. Shareholders
have under certain circumstances (e.g., upon application and submission of
certain specified documents to the 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. No material amendment may be made to the Trust's Declaration of
Trust without the affirmative vote of the holders of a majority of its
outstanding shares. Shares have no preference, pre-emptive, conversion or
similar rights. Shares, when issued, are fully paid and non-assessable, except
as set forth below. The Trust may enter into a merger or consolidation, or sell
all or substantially all of its assets, if approved by the vote of the holders
of two-thirds of its outstanding shares, except that if the Trustees of the
Trust recommend such sale of assets, the approval by vote of the holders of a
majority of the Trust's outstanding shares will be sufficient. The Trust may
also be terminated upon liquidation and distribution of its assets, if approved
by the vote of the holders of two-thirds of its outstanding shares.
Stock certificates are not issued by the Trust.
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 or Financial Intermediary may vote any
shares as to which that Eligible Institution or Financial Intermediary 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 or Financial Intermediary is the agent of record. Any
shares so voted by an Eligible Institution or Financial Intermediary are deemed
represented at the meeting for purposes of quorum requirements.
The Trustees of the Trust themselves have the power to alter the number
and the terms of office of the Trustees of the Trust, 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 of the Trust have been elected by the shareholders.
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 and liabilities. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the Trust
and provides for indemnification and reimbursement of expenses out of Trust
property for any shareholder held personally liable for the obligations of the
Trust. The Declaration of Trust also provides that the Trust shall maintain
appropriate insurance (for example, fidelity bonding and errors and omissions
insurance) for the protection of the Trust, its shareholders, Trustees,
officers, employees and agents covering possible tort and other liabilities.
Thus, the risk of a shareholder's 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.
The Declaration of Trust further provides that obligations of the Trust
are not binding upon the Trustees individually but only upon the property of the
Trust and that the Trustees are not liable for any action or failure to act, but
nothing in the Declaration of Trust protects a Trustee against any liability to
which he would otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office.
The Trust may, in the future, seek to achieve the Fund's investment
objective by investing all of the Fund's investable assets in a no-load,
diversified, open-end management investment company having substantially the
same investment objective as those applicable to the Fund. In such event, the
Fund would no longer directly require investment advisory services and therefore
would pay no investment advisory fees. Further, the administrative services fee
paid from the Fund would be reduced. At a shareholder's meeting held on
September 23, 1993, the Fund's shareholders approved changes to the investment
restrictions of the Fund to authorize such an investment. Such an investment
would be made only if the Trustees believe that the aggregate per share expenses
of the Fund and such other investment company would be less than or
approximately equal to the expenses which the Fund would incur if the Trust were
to continue to retain the services of an investment adviser for the Fund and the
assets of the Fund were to continue to be invested directly in portfolio
securities.
It is expected that the investment in another investment company will
have no preference, preemptive, conversion or similar rights, and will be fully
paid and non-assessable. It is expected that the investment company will not be
required to hold annual meetings of investors, but will hold special meetings of
investors when, in the judgment of its trustees, it is necessary or desirable to
submit matters for an investor vote. It is expected that each investor will be
entitled to a vote in proportion to the share of its investment in such
investment company. Except as described below, whenever the Trust is requested
to vote on matters pertaining to the investment company, the Trust would hold a
meeting of the Fund's shareholders and would cast its votes on each matter at a
meeting of investors in the investment company proportionately as instructed by
the Fund's shareholders.
However, subject to applicable statutory and regulatory requirements,
the Trust would not request a vote of the Fund's shareholders with respect to
(a) any proposal relating to the investment company in which the Fund's assets
were invested, which proposal, if made with respect to the Fund, would not
require the vote of the shareholders of the Fund, or (b) any proposal with
respect to the investment company that is identical, in all material respects,
to a proposal that has previously been approved by shareholders of the Fund.
PORTFOLIO BROKERAGE TRANSACTIONS
Brown Brothers Harriman & Co., as Investment Adviser, places orders for
all purchases and sales of portfolio securities, enters into repurchase and
reverse repurchase agreements and executes loans of portfolio securities.
Fixed-income securities are generally traded at a net price with dealers acting
as principal for their own account without a stated commission. The price of the
security usually includes a profit to the dealer. In underwritten offerings,
securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. On occasion, certain money market instruments may be
purchased directly from an issuer, in which case no commissions or discounts are
paid.
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 best execution, including lower
brokerage commissions, if appropriate. In such event, allocation of the
securities so purchased or sold as well as any expenses incurred in the
transaction are made by Brown Brothers Harriman & Co. in the manner it considers
to be most equitable and consistent with its fiduciary obligations to its
customers, including the Fund. In some instances, this procedure might adversely
affect the Fund.
Although the Fund generally holds investments until maturity and does not
seek profits through short-term trading, it may dispose of any portfolio
security prior to its maturity if it believes such disposition advisable.
U.S. Treasury securities are generally traded on a net basis and do not
normally involve either brokerage commissions or transfer taxes. Where possible
transactions on behalf of the Fund are entered directly with the issuer or
market maker for the securities involved. Purchases from dealers serving as
market makers may include a spread between the bid and asked price. The policy
of the Fund regarding purchases and sales of securities is that primary
consideration will be given to obtaining the most favorable prices and efficient
executions of transactions. In seeking to implement the 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. 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 furnish research and other services to the Fund and or the Investment
Adviser. Such services may include, but are not limited to, any one or more of
the following: information as to the availability of securities for purchase or
sale; statistical or factual information or opinions pertaining to investment;
and appraisals or evaluations of portfolio securities.
ADDITIONAL INFORMATION
As used in this Statement of Additional Information and the 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 the independent auditors.
With respect to the securities offered by the Prospectus, this
Statement of Additional Information and the Prospectus do not contain all the
information included in the Registration Statement filed with the Securities and
Exchange Commission under the Securities Act of 1933. Pursuant to the rules and
regulations of the Securities and Exchange Commission, certain portions have
been omitted. The Registration Statement including the exhibits filed therewith
may be examined at the office of the Securities and Exchange Commission in
Washington, D.C. or by calling 1-202-942-8090. Additionally, this information is
available on the EDGAR databse at the SEC's internet site at http://www.sec.gov.
A copy may be obtained, after paying a duplicating fee, by electronic request at
the following e-mail address: publicinfo.sec.gov.
Statements contained in this Statement of Additional Information and
the Prospectus concerning the contents of any contract or other document are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement. Each such statement is qualified in all respects by such reference.
A copy of the Declaration of Trust establishing the Trust is on file in
the office of the Secretary of the Commonwealth of Massachusetts.
FINANCIAL STATEMENTS
The Annual Report of the Fund dated June 30, 2000 has been filed with
the Securities and Exchange Commission pursuant to Section 30(b) of the 1940 Act
and Rule 30b2-1 thereunder and is hereby incorporated herein by reference. A
copy of the Annual Report will be provided, without charge, to each person
receiving this Statement of Additional Information.
<PAGE>
ws5669d
1
STATEMENT OF ADDITIONAL INFORMATION
THE 59 WALL STREET TAX EXEMPT MONEY FUND
21 Milk Street, Boston, Massachusetts 02109
The 59 Wall Street Tax Exempt Money Fund (the "Fund") is a separate
diversified series of The 59 Wall Street Trust (the "Trust") organized as a
Massachusetts business trust on June 7, 1983, a management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Fund is a type of mutual fund commonly known as a tax exempt money
market fund. The Fund is designed to be a cost effective and convenient means of
making substantial investments in tax exempt 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. There can be no assurance that the
investment objective of the Fund will be achieved.
The Annual Report of the Fund for the period June 30, 1999 through June
30, 2000 has been filed with the Securities and Exchange Commission pursuant to
Section 30(b) of the 1940 Act and Rule 30b2-1 thereunder and is hereby
incorporated herein by reference. A copy the Annual Report will be provided,
without charge, to each person receiving this Statement of Additional
Information.
Brown Brothers Harriman & Co. is the investment adviser of the Fund
(the "Investment Adviser"). This Statement of Additional Information is not a
prospectus and should be read in conjunction with the Prospectus dated October
1, 2000, a copy of which may be obtained from the Trust at the address noted
above.
The date of this Statement of Additional Information is October 1, 2000
<TABLE>
<CAPTION>
Table of Contents
<S> <C> <C>
Cross-Reference to
Page Page in Prospectus
Investments
Investment Objective and Policies . . . . . 3 3-4
Investment Restrictions . . . . . . . . 7
Management
Trustees and Officers . . . . . 9
Investment Adviser . . . . . . . . . . 13 6
Administrators. . . . . . . . . . . . 14
Distributor . . . . . . . . . . . . 15
Shareholder Servicing Agent,
Financial Intermediaries and Eligible Institutions 16-17
Custodian, Transfer and Dividend Disbursing
Agent 17
Independent Auditors 17
</TABLE>
<TABLE>
<CAPTION>
Table of Contents
<S> <C> <C>
Cross-Reference to
Page Page in Prospectus
Net Asset Value; Redemption in Kind . . . . 17-18 6
Computation of Performance . . . . . . . 19
Purchases and Redemptions 20
Federal Taxes . . . . . . . . . . . . 20-22
Description of Shares . . . . . . . . . 22-25
Portfolio Brokerage Transactions . . . . 25
Additional Information. . . . . . . . . . . . . . . 26
Financial Statements . . . . . . . . . 26
</TABLE>
The date of this Statement of Additional Information is October 1, 2000
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The following supplements the information contained in the Prospectus
concerning the investment objective, policies and techniques of the Fund.
Municipal leases and participation interests therein may take the form of a
lease, an installment purchase, or a conditional sale contract and are issued by
state and local governments and authorities to acquire land or a wide variety of
equipment and facilities.
Generally, the Fund will not hold these obligations directly as a lessor of the
property, but will purchase a participation interest in a municipal obligation
from a bank or other third party. A participation interest gives the purchaser a
specified, undivided interest in the obligation in proportion to its purchased
interest in the total amount of the issue.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set forth
requirements that states or municipalities must meet to incur debt. These may
include voter referenda, interest rate limits, or public sale requirements.
Leases, installment purchases, or conditional sale contracts (which normally
provide for title to the leased asset to pass to the governmental issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for the issuance
of debt. Many leases and contracts include "non-appropriation clauses" providing
that the governmental issuer has no obligation to make future payments under the
lease or contract unless money is appropriated for such purposes by the
appropriate legislative body on a yearly or other periodic basis.
Non-appropriation clauses free the issuer from debt issuance limitations. If a
municipality stops making payments or transfers its obligations to a private
entity, the obligation could lose value or become taxable.
Municipal market disruption risk. The value of municipal securities may be
affected by uncertainties in the municipal market related to legislation or
litigation involving the taxation of municipal securities or the rights of
municipal securities holders in the event of a bankruptcy. Proposals to restrict
or eliminate the federal income tax exemption for interest on municipal
securities are introduced before Congress from time to time. Proposals also may
be introduced before state legislatures that would affect the state tax
treatment of a municipal fund"s distributions. If such proposals were enacted,
the availability of municipal securities and the value of a municipal fund"s
holdings would be affected and the Trustees would reevaluate the Fund"s
investment objectives and policies. Municipal bankruptcies are relatively rare,
and certain provisions of the U.S. Bankruptcy Code governing such bankruptcies
are unclear and remain untested. Further, the application of state law to
municipal issuers could produce varying results among the states or among
municipal securities issuers within a state. These legal uncertainties could
affect the municipal securities market generally, certain specific segments of
the market, or the relative credit quality of particular securities. Any of
these effects could have a significant impact on the prices of some or all of
the municipal securities held by the Fund, making it more difficult for the Fund
to maintain a stable net asset value per share.
Education. In general, there are two types of education-related bonds; those
issued to finance projects for public and private colleges and universities, and
those representing pooled interests in student loans. Bonds issued to supply
educational institutions with funds are subject to the risk of unanticipated
revenue decline, primarily the result of decreasing student enrollment or
decreasing state and federal funding. Among the factors that may lead to
declining or insufficient revenues are restrictions on students'"ability to pay
tuition, availability of state and federal funding, and general economic
conditions. Student loan revenue bonds are generally offered by state (or
substate) authorities or commissions and are backed by pools of student loans.
Underlying student loans may be guaranteed by state guarantee agencies and may
be subject to reimbursement by the United States Department of Education through
its guaranteed student loan program. Others may be private, uninsured loans made
to parents or students which are supported by reserves or other forms of credit
enhancement. Recoveries of principal due to loan defaults may be applied to
redemption of bonds or may be used to re-lend, depending on program latitude and
demand for loans. Cash flows supporting student loan revenue bonds are impacted
by numerous factors, including the rate of student loan defaults, seasoning of
the loan portfolio, and student repayment deferral periods of forbearance. Other
risks associated with student loan revenue bonds include potential changes in
federal legislation regarding student loan revenue bonds, state guarantee agency
reimbursement and continued federal interest and other program subsidies
currently in effect.
Electric utilities. The electric utilities industry has been experiencing, and
will continue to experience, increased competitive pressures. Federal
legislation in the last two years will open transmission access to any
electricity supplier, although it is not presently known to what extent
competition will evolve. Other risks include: (a) the availability and cost of
fuel, (b) the availability and cost of capital, (c) the effects of conservation
on energy demand, (d) the effects of rapidly changing environmental, safety, and
licensing requirements, and other federal, state, and local regulations, (e)
timely and sufficient rate increase, and (f) opposition to nuclear power.
Health care. The health care industry is subject to regulatory action by a
number of private and governmental agencies, including federal, state, and local
governmental agencies. A major source of revenues for the health care industry
is payments from the Medicare and Medicaid programs. As a result, the industry
is sensitive to legislative changes and reductions in governmental spending for
such programs. Numerous other factors may affect the industry, such as general
and local economic conditions; demand for services; expenses (including
malpractice insurance premiums); and competition among health care providers. In
the future, the following elements may adversely affect health care facility
operations: adoption of legislation proposing a national health insurance
program; other state or local health care reform measures; medical and
technological advances which dramatically alter the need for health services or
the way in which such services are delivered; changes in medical coverage which
alter the traditional fee-for-service revenue stream; and efforts by employers,
insurers, and governmental agencies to reduce the costs of health insurance and
health care services.
Housing. Housing revenue bonds are generally issued by a state, county, city,
local housing authority, or other public agency. They generally are secured by
the revenues derived from mortgages purchased with the proceeds of the bond
issue. It is extremely difficult to predict the supply of available mortgages to
be purchased with the proceeds of an issue or the future cash flow from the
underlying mortgages. Consequently, there are risks that proceeds will exceed
supply, resulting in early retirement of bonds, or that homeowner repayments
will create an irregular cash flow. Many factors may affect the financing of
multi-family housing projects, including acceptable completion of construction,
proper management, occupancy and rent levels, economic conditions, and changes
to current laws and regulations.
Transportation. Transportation debt may be issued to finance the construction of
airports, toll roads, highways, or other transit facilities. Airport bonds are
dependent on the general stability of the airline industry and on the stability
of a specific carrier who uses the airport as a hub. Air traffic generally
follows broader economic trends and is also affected by the price and
availability of fuel. Toll road bonds are also affected by the cost and
availability of fuel as well as toll levels, the presence of competing roads and
the general economic health of an area. Fuel costs and availability also affect
other transportation-related securities, as do the presence of alternate forms
of transportation, such as public transportation.
Water and sewer. Water and sewer revenue bonds are often considered to have
relatively secure credit as a result of their issuer's importance, monopoly
status, and generally unimpeded ability to raise rates. Despite this, lack of
water supply due to insufficient rain, run-off, or snow pack is a concern that
has led to past defaults. Further, public resistance to rate increases, costly
environmental litigation, and federal environmental mandates are challenges
faced by issuers of water and sewer bonds.
Put features entitle the holder to sell a security back to the issuer or a third
party at any time or at specified intervals. In exchange for this benefit, the
Fund may accept a lower interest rate. Securities with put features are subject
to the risk that the put provider is unable to honor the put feature (purchase
the security). Put providers often support their ability to buy securities on
demand by obtaining letters of credit or other guarantees from other entities.
Demand features, standby commitments, and tender options are types of put
features.
Repurchase Agreements. 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.
Participation Certificates. 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. The
interest rate generally is adjusted periodically, and the holder can sell back
to the issuer after a specified notice period. If interest rates rise or fall,
the rates on participation certificates and other variable rate instruments
generally will be readjusted. As a result, these instruments do not offer the
same opportunity for capital appreciation or loss as fixed rate instruments.
Where the institution issuing the participation does not meet the Fund's
eligibility criteria, the participation is backed by an 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.
When-Issued and Delayed Delivery Securities. The Fund may purchase
municipal securities 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 and the Fund will set aside the assets to pay
for these securities at the time of the agreement. 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.
Zero Coupon Bonds. The Fund may invest in zero coupon bonds. These are
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.
Lease Obligation Bonds. The Fund may invest in lease obligation bonds.
These ar 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
Variable and Floating Rate Instruments. The Fund may invest in variable
rate and floating rate instruments. These are 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.
INVESTMENT RESTRICTIONS
The Fund is operated under the following investment restrictions which
are deemed fundamental policies and may be changed only with the approval of the
holders of a "majority of the Fund's outstanding voting securities" (as defined
in the 1940 Act) (see "Additional Information").
As a fundamental policy, at least 80% of the Fund's assets are invested
in securities the interest on which is exempt from federal income taxation and
alternative minimum tax.
Except that the Trust may invest all of the Fund's assets in an
open-end investment company with substantially the same investment objective,
policies and restrictions as the Fund, the Trust, with respect to the Fund, may
not:
(1) borrow money or mortgage or hypothecate its assets, except that in
an amount not to exceed 1/3 of the current value of its net assets, it may
borrow money as a temporary measure for extraordinary or emergency purposes and
enter into repurchase agreements, and except that it may pledge, mortgage or
hypothecate not more than 1/3 of such assets to secure such borrowings (it is
intended that money be borrowed only from banks and only either to accommodate
requests for the redemption of Fund 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) or reverse repurchase agreements, and except that assets may
be pledged to secure letters of credit solely for the purpose of participating
in a captive insurance company sponsored by the Investment Company Institute;
(2) purchase any security or evidence of interest therein on margin,
except that such short-term credit as may be necessary for the clearance of
purchases and sales of securities may be obtained;
(3) write, purchase or sell any put or call option or any combination
thereof;
(4) underwrite securities issued by other persons except insofar as it
may technically be deemed an underwriter under the Securities Act of 1933, as
amended in selling a portfolio security;
(5) make loans to other persons except (a) through the lending of its
portfolio securities and provided that any such loans not exceed 30% of its
total net assets (taken at market value), (b) through the use of repurchase
agreements or the purchase of short-term obligations and provided that not more
than 10% of its total assets are invested in repurchase agreements maturing in
more than seven days, or (c) by purchasing, subject to the limitation in
paragraph 6 below, a portion of an issue of debt securities of types commonly
distributed privately to financial institutions, for which purposes the purchase
of a portion of an issue of debt securities which are part of an issue to the
public shall not be considered the making of a loan;
(6) knowingly invest in securities which are subject to legal or
contractual restrictions on resale (other than repurchase agreements maturing in
not more than seven days) if, as a result thereof, more than 10% of the its
total assets (taken at market value) would be so invested (including repurchase
agreements maturing in more than seven days);
(7) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the freedom of action to hold and to sell real
estate acquired as a result of the ownership of securities is reserved);
(8) make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment of
any further consideration, for securities of the same issue and equal in amount
to, the securities sold short, and unless not more than 10% of its net assets
(taken at market value) is represented by such securities, or securities
convertible into or exchangeable for such securities, at any one time (it is the
present intention of management to make such sales only for the purpose of
deferring realization of gain or loss for federal income tax purposes);
(9) concentrate its investments in any particular industry, but if it
is deemed appropriate for the achievement of its investment objective, up to 25%
of its assets, at market value at the time of each investment, may be invested
in any one industry; or
(10) issue any senior security (as that term is defined in the 1940
Act) if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder.
Non-Fundamental Restrictions. The Fund may not as a matter of operating
policy (except that the Fund may invest all of the Fund's assets in an open-end
investment company with substantially the same investment objective, policies
and restrictions as the Fund): (i) purchase securities of any investment company
if such purchase at the time thereof would cause more than 10% of its total
assets (taken at the greater of cost or market value) to be invested in the
securities of such issuers or would cause more than 3% of the outstanding voting
securities of any such issuer to be held; or (ii) invest more than 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. or (iii) invest more than 10%
of its net assets (taken at the greater of cost or market value) in restricted
securities. These policies are not fundamental and may be changed without
shareholder approval.
Percentage and Rating Restrictions. If a percentage or rating
restriction on investment or utilization of assets set forth above or referred
to in the Prospectus is adhered to at the time an investment is made or assets
are so utilized, a later change in percentage resulting from changes in the
value of the portfolio securities or a later change in the rating of a portfolio
security is not considered a violation of policy.
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).
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.
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.
The Trustees and executive officers of the Trust, their principal
occupations during the past five years (although their titles may have varied
during the period) and business addresses are:
TRUSTEES OF THE TRUST
J.V. SHIELDS, JR.* (aged 62) - Chairman of the Board and Trustee;
Director of The 59 Wall Street Fund, Inc.; Trustee of the BBH Portfolios(1)
(since October 1999); Director of BBH Common Settlement Fund, Inc. (since August
2000); Managing Director, Chairman and Chief Executive Officer of Shields &
Company; Chairman of Capital Management Associates, Inc.; Director of Flowers
Industries, Inc.(2) Vice Chairman and Trustee of New York Racing Association.
His business address is Shields & Company, 140 Broadway, New York, NY 10005.
EUGENE P. BEARD** (aged 65) - Trustee; Director of The 59 Wall Street
Fund, Inc.; Trustee of the BBH Portfolios (since October 1999); Director of BBH
Common Settlement Fund, Inc. (since August 2000); Executive Vice President -
Finance and Operations of The Interpublic Group of Companies. His business
address is The Interpublic Group of Companies, Inc., 1271 Avenue of the
Americas, New York, NY 10020.
DAVID P. FELDMAN** (aged 60) - Trustee; Director of The 59 Wall Street
Fund, Inc.; Trustee of the BBH Portfolios (since October 1999); Director of BBH
Common Settlement Fund, Inc. (since August 2000); Retired; Vice President and
Investment Manager - AT&T Investment Management Corporation (prior to October
1997); Director of Dreyfus Mutual Funds, Jeffrey Co. and Heitman Financial. His
business address is 3 Tall Oaks Drive, Warren, NJ 07059.
ALAN G. LOWY** (aged 61) - Trustee; Director of The 59 Wall Street Fund,
Inc.; Trustee of the BBH Portfolios (since October 1999); Director of BBH Common
Settlement Fund, Inc. (since August 2000); Private Investor; Secretary of the
Los Angeles County Board of Investments (prior to March 1995). His business
address is 4111 Clear Valley Drive, Encino, CA 91436.
ARTHUR D. MILTENBERGER** (aged 61) - Trustee; Director of The 59 Wall
Street Fund, Inc.; Trustee of the BBH Portfolios (since October 1999); Director
of BBH Common Settlement Fund, Inc. (since August 2000); Retired, Executive Vice
President and Chief Financial Officer of Richard K. Mellon and Sons (prior to
June 1998); Treasurer of Richard King Mellon Foundation (prior to June 1998);
Vice President of the Richard King Mellon Foundation; Trustee, R.K. Mellon
Family Trusts; General Partner, Mellon Family Investment Company IV, V and VI;
Director of Aerostructures Corporation (since 1996)(2). His business address is
Richard K. Mellon and Sons, P.O. Box RKM, Ligonier, PA 15658.
RICHARD L. CARPENTER** (aged 67) - Trustee (since October 1999);
Trustee of the BBH Portfolios; Trustee of Dow Jones Islamic Market Index
Portfolio (since March 1999); Director of The 59 Wall Street Fund, Inc. (since
October 1999); Director of BBH Common Settlement Fund, Inc. (since August 2000);
Retired; Director of Investments, Pennsylvania Public School Employees'
Retirement System (prior to December 1997). His business address is 12664 Lazy
Acres Court, Nevada City, CA 95959.
CLIFFORD A. CLARK** (aged 70) - Trustee (since October 1999); Trustee of
the BBH Porfolios; Trustee of Dow Jones Islamic Market Index Portfolio (since
March 1999); Director of The 59 Wall Street Fund, Inc. (since October 1999);
Director of BBH Common Settlement Fund, Inc. (since August 2000); Retired. His
business address is 42 Clowes Drive, Falmouth, MA 02540.
DAVID M. SEITZMAN** (aged 71) - Trustee (since October 1999); Director of
The 59 Wall Street Fund, Inc. (since October 1999); Trustee of the BBH
Porfolios; Director of BBH Common Settlement Fund, Inc. (since August 2000);
Physician, Private Practice. His business address is 7117 Nevis Road, Bethesda,
MD 20817.
J. ANGUS IVORY (aged 68) - Trustee (since October 1999); Trustee of the
BBH Portfolios (since October 1999); Director of The 59 Wall Street Fund, Inc.
(since October 1999); Trustee of Dow Jones Islamic Market Index Portfolio (since
March 1999); Director of BBH Common Settlement Fund, Inc. (since August 2000);
Retired; Director of Brown Brothers Harriman Ltd., subsidiary of Brown Brothers
Harriman & Co.; Director of Old Daily Saddlery; Advisor, RAF Central Fund;
Committee Member, St. Thomas Hospital Pain Clinic (since 1999).
OFFICERS OF THE TRUST
PHILIP W. COOLIDGE (aged 49) - President; President of the BBH
Portfolios; Chief Executive Officer and President of Signature Financial Group,
Inc. ("SFG"), 59 Wall Street Distributors, Inc. ("59 Wall Street Distributors")
and 59 Wall Street Administrators, Inc. ("59 Wall Street Administrators").
JAMES E. HOOLAHAN (aged 52) - Vice President; Senior Vice President of
SFG.
LINWOOD C. DOWNS (aged 38) -Treasurer; Treasurer of the BBH Portfolios;
Senior Vice President and Treasurer of SFG; and Treasurer of 59 Wall Street
Administrators and 59 Wall Street Distributors.
MOLLY S. MUGLER (aged 48) - Secretary; Secretary of the BBH Portfolios;
Legal Counsel and Secretary of SFG; Secretary of 59 Wall Street Distributors and
59 Wall Street Administrators.
SUSAN JAKUBOSKI (aged 36) - Assistant Treasurer; Assistant Treasurer of
the BBH Portfolios; Assistant Secretary, Assistant Treasurer and Vice President
of Signature Financial Group (Cayman) Limited; and Assistant Treasurer of 59
Wall Street Administrators and 59 Wall Street Distributors.
CHRISTINE D. DORSEY (aged 30) - Assistant Secretary; Assistant
Secretary of the BBH Portfolios; Vice President of SFG (since January 1996);
Paralegal and Compliance Officer, various financial companies (July 1992 to
January 1996).
----------------------
* Mr. Shields is an "interested person" of the Trust because of his
affiliation with a registered broker-dealer.
** These Trustees are members of the Audit Committee of the Trust.
(1) The BBH Portfolios consist of the following active investment
companies: BBH U.S. Money Market Portfolio, BBH International Equity
Portfolio, BBH U.S. Equity Portfolio, BBH European Equity Portfolio,
BBH Pacific Basin Equity Portfolio, BBH High Yield Fixed Income
Portfolio, BBH Broad Market Fixed Income Portfolio and BBH Global
Equity Portfolio and the following inactive investment companies: BBH
U.S. Balanced Growth Portfolio and BBH U.S. Intermediate Tax-Exempt
Bond Portfolio.
(2) Shields & Company, Capital Management Associates, Inc. and Flowers
Industries, Inc., with which Mr. Shields is associated, are a
registered broker-dealer and a member of the New York Stock Exchange, a
registered investment adviser, and a diversified food company,
respectively.
(3) Richard K. Mellon and Sons, Richard King Mellon Foundation, R.K. Mellon
Family Trusts, Mellon Family Investment Company IV, V and VI and
Aerostructures Corporation, with which Mr. Miltenberger is or has been
associated, are a private foundation, a private foundation, a trust, an
investment company and an aircraft manufacturer, respectively.
Each Trustee and officer listed above holds the equivalent position with
The 59 Wall Street Fund, Inc. The address of each officer is 21 Milk Street,
Boston, Massachusetts 02109. Messrs. Coolidge, Hoolahan and Downs, and Mss.
Jakuboski, Mugler and Dorsey also hold similar positions with other investment
companies for which affiliates of 59 Wall Street Distributors serve as the
principal underwriter.
Except for Mr. Shields, no Trustee is an "interested person" of the Trust
as that term is defined in the 1940 Act.
<TABLE>
<CAPTION>
Trustees of the Trust and the Portfolio
The Trustees of the Trust and the Portfolio receive a base annual fee
of $15,000 (except the Chairmen who receive a base annual fee of $20,000) and
such base annual fee is allocated among all series of the Trust, all series of
The 59 Wall Street Fund, Inc. and the Portfolios and any other active Portfolios
having the same Board of Trustees based upon their respective net assets. In
addition, each series of the Trust and The 59 Wall Street Fund, Inc., the
Portfolios and any other active Portfolios which has commenced operations pays
an annual fee to each Trustee of $1,000.
<S> <C> <C> <C> <C>
Pension or Total
Aggregate Retirement Compensation
Compensation Benefits Accrued Estimated Annual from Fund
Name of Person, from the Fund as Part of Benefits upon Complex Paid
Position Complex* Fund Expenses Retirement to Trustees
J.V. Shields, Jr., $14,685 none none $35,000
Trustee
Eugene P. Beard, $12,013 none none $30,000
Trustee
Richard L. Carpenter, $8,001 none none $30,000
Trustee
Clifford A. Clark, $8,001 none none $30,000
Trustee
David P. Feldman, $12,013 none none $30,000
Trustee
J. Angus Ivory, $8,001 none none $30,000
Trustee
Alan G. Lowy, $12,013 none none $30,000
Trustee
Arthur D. Miltenberger, $12,013 none none $30,000
Trustee
David M. Seitzman, $8,001 none none $30,000
Trustee
<FN>
* The Fund Complex consists of the Trust, The 59 Wall Street Fund, Inc. (which currently consists of seven
series) and the seven Portfolios.
</FN>
</TABLE>
By virtue of the responsibilities assumed by Brown Brothers Harriman & Co.
under the Investment Advisory Agreement and the Administration Agreement (see
"Investment Adviser" and "Administrator"), the Trust itself requires no
employees other than its officers, and none of its officers devote full time to
the affairs of the Trust or, other than the Chairman, receive any compensation
from the Fund.
As of August 31, 2000, the Trust's Trustees and officers as a group owned
less than 1% of the Fund's outstanding shares of the Trust. At the close of
business on that date no person, to the knowledge of management, owned
beneficially more than 5% of the outstanding shares of the Fund. As of that
date, the Partners of Brown Brothers Harriman & Co. and their immediate families
owned 4,947,756 (3.20%) shares of the Fund. Brown Brothers Harriman & Co. and
its affiliates separately have investment discretion over an additional
107,688,228 (69.70%) shares of the Fund, as to which shares Brown Brothers
Harriman & Co. disclaims beneficial ownership.
INVESTMENT ADVISER
Under its Investment Advisory Agreement with the Trust, subject to the
general supervision of the Trust's Trustees and in conformance with the stated
policies of the Fund, Brown Brothers Harriman & Co. provides investment advice
and portfolio management services to the Fund. In this regard, it is the
responsibility of Brown Brothers Harriman & Co. to make the day-to-day
investment decisions for the Fund, to place the purchase and sale orders for
portfolio transactions of the Fund and to manage, generally, the Fund's
investments.
The Investment Advisory Agreement between Brown Brothers Harriman & Co.
and the Trust is dated February 12, 1991, as amended and restated November 1,
1993 and remains in effect for two years from such date and thereafter, but only
as long as the agreement is specifically approved annually (i) by a vote of the
holders of a "majority of the Fund's outstanding voting securities" (as defined
in the 1940 Act) or by the Trust's Trustees, and (ii) by a vote of a majority of
the Trustees of the Trust who are not parties to the Investment Advisory
Agreement or "interested persons" (as defined in the 1940 Act) of the Trust
("Independent Trustees"), cast in person at a meeting called for the purpose of
voting on such approval. The Investment Advisory Agreement was most recently
approved by the Independent Trustees on November 9, 1999. The Investment
Advisory Agreement terminates automatically if assigned and is terminable at any
time without penalty by a vote of a majority of the Trustees of the Trust or by
a vote of the holders of a "majority of the Fund's outstanding voting
securities" (as defined in the 1940 Act) on 60 days' written notice to Brown
Brothers Harriman & Co. and by Brown Brothers Harriman & Co. on 90 days' written
notice to the Trust (see "Additional Information").
The investment advisory fee paid to the Investment Adviser is calculated
daily and paid monthly at an annual rate equal to 0.15% of the Fund's average
daily net assets. For the period February 16, 1999 through June 30, 1999, the
Fund incurred $4,948 for advisory services. For the fiscal year ended June 30,
2000, the Fund incurred $126,507 for advisory services.
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.
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.
The Administration Agreement between the Trust and Brown Brothers Harriman
& Co. (dated November 1, 1993) will remain in effect for two years from such
date and thereafter, but only so long as such agreement is specifically approved
at least annually in the same manner as the Investment Advisory Agreement (see
"Investment Adviser"). The Independent Trustees of the Trust most recently
approved the Trust's Administration Agreement on November 9, 1999. The agreement
will terminate automatically if assigned by either party thereto and is
terminable at any time without penalty by a vote of a majority of the Trustees
of the Trust or by a vote of the holders of a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the Trust (see "Additional
Information"). The Administration Agreement is terminable by the Trust's
Trustees or shareholders of the Trust on 60 days' written notice to Brown
Brothers Harriman & Co. and by Brown Brothers Harriman & Co. on 90 days' written
notice to the Trust.
The administrative fee paid to Brown Brothers Harriman & Co. is calculated
daily and payable monthly at an annual rate equal to 0.10% of the Fund's average
daily net assets. For the period February 16, 1999 through June 30, 1999, the
Fund incurred $3,299 for administrative services. For the fiscal year ended June
30, 2000, the Fund incurred $84,338 for administrative services.
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 andclerical 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.
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.
The Distribution Agreement (dated August 31, 1990) between the Trust and
59 Wall Street Distributors remains in effect for two years from the date of its
execution and thereafter, but only so long as the continuance of such agreement
is specifically approved at least annually in conformity with the requirements
of the 1940 Act. The Distribution Agreement was most recently approved by the
Independent Trustees of the Trust on February 8, 2000. The agreement terminates
automatically if assigned by either party thereto and is terminable with respect
to the Fund at any time without penalty by a vote of a majority of the Trustees
of the Trust or by a vote of the holders of a "majority of the Fund's
outstanding voting securities" (as defined in the 1940 Act) (see "Additional
Information"). The Distribution Agreement is terminable with respect to the Fund
by the Trust's Trustees or shareholders of the Fund on 60 days' written notice
to 59 Wall Street Distributors. The agreement is terminable by 59 Wall Street
Distributors on 90 days' written notice to the Trust.
59 Wall Street Distributors holds itself available to receive purchase
orders for Fund shares.
EXPENSE PAYMENT AGREEMENT
Under an expense payment agreement dated February 9, 2000, 59 Wall Street
Administrators pays the Fund's expenses (see "Expense Table" in the Prospectus),
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 0.65% of the average daily net assets of the
Fund. Such fees are computed daily and paid monthly. The expense payment
agreement will terminate on December 31, 2004. If there had been no expense
payment agreement, the Trustees of the Trust estimate that, at the Fund's
current level, the total operating expenses of the Fund may increase to
approximately 1.23% of the average annual net assets of the Fund.
The expenses of the Fund paid by 59 Wall Street Administrators under
the agreement include the shareholder servicing/eligible institution fees, the
compensation of the Trustees of the Trust; governmental fees; interest charges;
taxes; membership dues in the Investment Company Institute allocable to the
Fund; 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; and expenses
relating to the issuance, registration and qualification of shares of 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
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.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, is the Fund's Custodian. 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.
Forum Shareholder Services, LLC, Two Portland Square, Portland, ME 04101
is the Transfer and Dividend Disbursing Agent for the Fund. The Transfer and
Dividend Disbursing Agent is responsible for maintaining the books and records
detailing ownership of the Fund's shares.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, Boston, Massachusetts are the independent auditors
for the Fund.
CODE OF ETHICS
The Trust, the Adviser and the Distributor each have adopted a code of
ethics pursuant to Rule 17j-1 under the 1940 Act. Each code of ethics permits
personnel subject to such code of ethics to invest in securities, including
securities that may be purchased or held by the Fund. However, the codes of
ethics contain provisions and requirements designed to identify and address
certain conflicts of interest between personal investment activities and the
interests of the Fund. Of course, there can be no assurance that the codes of
ethics will be effective in identifying and addressing all conflicts of interest
relating to personal securities transactions. The code of ethics of the Trust,
the Adviser and the Distributor are on file with and are available from the SEC
(See "Additional Information" below).
NET ASSET VALUE
The net asset value of each of the Fund's shares is determined each day
the New York Stock Exchange is open for regular trading and New York banks are
open for business. (As of the date of this Statement of Additional Information,
such Exchange and banks are so open every weekday except for the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day,
Thanksgiving Day and Christmas.) This determination of net asset value of each
share of the Fund is made once during each such day as of the close of regular
trading on such Exchange by subtracting from the value of the Fund's total
assets 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 of each share of the Fund will remain
constant at $1.00 and, although no assurance can be given that it will be able
to do so on a continuing basis, the Trust employs specific investment policies
and procedures to accomplish this result.
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.
Pursuant to a rule of the Securities and Exchange Commission, an
investment company may use the amortized cost method of valuation subject to
certain conditions and the determination that such method is in the best
interests of its shareholders. The use of amortized cost valuations for the Fund
is subject to the following conditions: (i) as a particular responsibility
within the overall duty of care owed to the Fund's shareholders, the Trustees
have established procedures reasonably designed, taking into account current
market conditions and the Fund's investment objective, to stabilize the net
asset value per share as computed for the purpose of distribution and redemption
at $1.00 per share; (ii) the procedures include periodic review by the Trustees,
as they deem appropriate and at such intervals as are reasonable in light of
current market conditions, of the relationship between the net asset value per
share using amortized cost and the net asset value per share based upon
available indications of market value with respect to such portfolio securities;
(iii) the Trustees will consider what steps, if any, should be taken if a
difference of more than 1/2 of 1% occurs between the two methods of valuation;
and (iv) the Trustees will take such steps as they consider appropriate, such as
changing the dividend policy, shortening the average portfolio maturity,
realizing gains or losses, establishing a net asset value per share by using
available market quotations, or reducing the value of the Fund's outstanding
shares, to minimize any material dilution or other unfair results which might
arise from differences between the two methods of valuation.
Such conditions also generally require that: (i) investments for the Fund
be limited to instruments which the Trustees determine present minimal credit
risks and which are of high quality as determined by any nationally recognized
statistical rating organization that is not an affiliated person of the issuer
of, or any issuer, guarantor or provider of credit support for, the instrument,
or, in the case of any instrument that is not so rated, is of comparable quality
as determined by the Investment Adviser under the general supervision of the
Trustees; (ii) a dollar-weighted average portfolio maturity of not more than 90
days be maintained appropriate to the Fund's objective of maintaining a stable
net asset value of $1.00 per share and no instrument is purchased with a
remaining maturity of more than 13 months; (iii) the Fund's available cash will
be invested in such a manner as to reduce such maturity to 90 days or less as
soon as is reasonably practicable, if the disposition of a portfolio security
results in a dollar-weighted average portfolio maturity of more than 90 days;
and (iv) no more than 5% of the Fund's total assets may be invested in the
securities of any one issuer (other than U.S. Government securities).
It is expected that the Fund will have a positive net income at the time
of each determination thereof. If for any reason the Fund's net income is a
negative amount, which could occur, for instance, upon default by an issuer of a
portfolio security, the Fund would first offset the negative amount with respect
to each shareholder account from the dividends declared during the month with
respect to those accounts. If and to the extent that negative net income exceeds
declared dividends at the end of the month, the Fund would reduce the number of
outstanding Fund shares by treating each shareholder as having contributed to
the capital of the Fund that number of full and fractional shares in his or her
account which represents his or her share of the amount of such excess. Each
shareholder would be deemed to have agreed to such contribution in these
circumstances by his or her investment in the Fund.
COMPUTATION OF PERFORMANCE
The current and effective yields of the Fund may be used from time to time
in shareholder reports or other communications to shareholders or prospective
investors. Seven-day current yield is computed by dividing the net change in
account value (exclusive of capital changes) of a hypothetical pre-existing
account having a balance of one share at the beginning of a seven-day calendar
period by the value of that account at the beginning of that period, and
multiplying the return over the seven-day period by 365/7. For purposes of the
calculation, net change in account value reflects the value of additional shares
purchased with dividends from the original share and dividends declared on both
the original share and any such additional shares, but does not reflect realized
gains or losses or unrealized appreciation or depreciation. The Fund's current
yield for the seven-day calendar period ended June 30, 2000 was 3.69%. In
addition, the Trust may use an effective annualized yield quotation for the Fund
computed on a compounded basis by adding 1 to the base period return (calculated
as described above), raising the sum to a power equal to 365/7, and subtracting
1 from the result. Based upon this latter method, the Fund's effective
annualized yield for the seven-day calendar period ended June 30, 2000 was 3.76%
The yield should not be considered a representation of the yield of the
Fund in the future since the yield is not fixed. Actual yields depend on the
type, quality and maturities of the investments held for the Fund, changes in
interest rates on investments, and the Fund's expenses during the period.
Yield information may be useful for reviewing the performance of the Fund
and for providing a basis for comparison with other investment alternatives.
However, unlike bank deposits or other investments which pay a fixed yield for a
stated period of time, the Fund's yield does fluctuate, and this should be
considered when reviewing performance or making comparisons.
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.
PURCHASES AND REDEMPTIONS
A confirmation of each purchase redemption transaction is issued on
execution of that transaction.
A shareholder's right to receive payment with respect to any redemption
may be suspended or the payment of the redemption proceeds postponed: (i) during
periods when the New York Stock Exchange is closed for other than weekends and
holidays or when regular trading on such Exchange is restricted as determined by
the Securities and Exchange Commission by rule or regulation, (ii) during
periods in which an emergency exists which causes disposal of, or evaluation of
the net asset value of, the Fund's portfolio securities to be unreasonable or
impracticable, or (iii) for such other periods as the Securities and Exchange
Commission may permit.
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.
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.
FEDERAL 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
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Under Subchapter M of the Code the Fund is not subject to federal income taxes
on amounts distributed to 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.
Qualification as a regulated investment company under the Code requires,
among other things, that (a) at least 90% of the Fund's annual gross income,
without offset for losses from the sale or other disposition of securities, be
derived from interest, payments with respect to securities loans, dividends and
gains from the sale or other disposition of securities or other income derived
with respect to its business of investing in such securities; (b) less than 30%
of the Fund's annual gross income be derived from gains (without offset for
losses) from the sale or other disposition of securities held for less than
three months; and (c) the holdings of the Fund be diversified so that, at the
end of each quarter of its fiscal year, (i) at least 50% of the market value of
the Fund's assets be represented by cash, U.S. Government securities and other
securities limited in respect of any one issuer to an amount not greater than 5%
of the Fund's assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of the Fund's assets be invested
in the securities of any one issuer (other than U.S. Government securities). In
addition, in order not to be subject to federal income tax, at least 90% of the
Fund's net investment income and net short-term capital gains earned in each
year must be distributed to the Fund's shareholders.
To maintain a constant $1.00 per share net asset value, the Trustees may
direct that the number of outstanding shares be reduced pro rata. If this
adjustment is made, it will reflect the lower market value of portfolio
securities and not realized losses.
Return of Capital. If the net asset value of shares is reduced below a
shareholder's cost as a result of a dividend or capital gains distribution from
the Fund, such dividend or capital gains distribution would be taxable even
though it represents a return of invested capital.
Redemption of Shares. 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 Fund shares 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. Additionally, any loss realized on a redemption or exchange of Fund
shares is disallowed to the extent the shares disposed of are replaced within a
period of 61 days beginning 30 days before such disposition, such as pursuant to
reinvestment of a dividend or capital gains distribution in Fund shares.
Other Taxes. 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.
The Fund may be subject to state or local taxes in jurisdictions in which
it is deemed to be doing business. In addition, the treatment of the Fund and
its shareholders in those states which have income tax laws might differ from
treatment under the federal income tax laws. Shareholders should consult their
own tax advisors with respect to any state or 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.
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. 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.
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 21 Milk Street, Boston,
Massachusetts 02109; its telephone number is (617) 423-0800. The Trust's
Declaration of Trust permits the Trust's Board of Trustees to issue an unlimited
number of full and fractional shares of beneficial interest and to divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the Trust. Each Fund share
represents an equal proportionate interest in the Fund with each other share.
Upon liquidation or dissolution of the Fund, the Fund's shareholders are
entitled to share pro rata in the Fund's net assets available for distribution
to its shareholders. Shares of each series participate equally in the earnings,
dividends and assets of the particular series. Shares of each series are
entitled to vote separately to approve advisory agreements or changes in
investment policy, but shares of all series vote together in the election or
selection of Trustees, principal underwriters and auditors for the Trust. Upon
liquidation or dissolution of the Trust, the shareholders of each series are
entitled to share pro rata in the net assets of their respective series
available for distribution to shareholders. The Trust reserves the right to
create and issue additional series of shares. The Trust currently consists of
four series.
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 are entitled to one vote for each share held on matters on
which they are entitled to vote. Shareholders in the Trust do not have
cumulative voting rights, and shareholders owning more than 50% of the
outstanding shares of the Trust may elect all of the Trustees of the Trust if
they choose to do so and in such event the other shareholders in the Trust would
not be able to elect any Trustee. The Trust is not required and has no current
intention to hold meetings of shareholders annually but the Trust will hold
special meetings of shareholders when in the judgment of the Trust's Trustees it
is necessary or desirable to submit matters for a shareholder vote. Shareholders
have under certain circumstances (e.g., upon application and submission of
certain specified documents to the 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. No material amendment may be made to the Trust's Declaration of
Trust without the affirmative vote of the holders of a majority of its
outstanding shares. Shares have no preference, pre-emptive, conversion or
similar rights. Shares, when issued, are fully paid and non-assessable, except
as set forth below. The Trust may enter into a merger or consolidation, or sell
all or substantially all of its assets, if approved by the vote of the holders
of two-thirds of its outstanding shares, except that if the Trustees of the
Trust recommend such sale of assets, the approval by vote of the holders of a
majority of the Trust's outstanding shares will be sufficient. The Trust may
also be terminated upon liquidation and distribution of its assets, if approved
by the vote of the holders of two-thirds of its outstanding shares.
Stock certificates are not issued by the Trust.
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 of the Financial Intermediary may vote any
shares as to which that Eligible Institution of the Financial Intermediary 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 of the Financial Intermediary is the agent
of record. Any shares so voted by an Eligible Institution of the Financial
Intermediary are deemed represented at the meeting for purposes of quorum
requirements.
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.
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 and liabilities. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the Trust
and provides for indemnification and reimbursement of expenses out of Trust
property for any shareholder held personally liable for the obligations of the
Trust. The Declaration of Trust also provides that the Trust shall maintain
appropriate insurance (for example, fidelity bonding and errors and omissions
insurance) for the protection of the Trust, its shareholders, Trustees,
officers, employees and agents covering possible tort and other liabilities.
Thus, the risk of a shareholder's 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.
The Declaration of Trust further provides that obligations of the Trust
are not binding upon the Trustees individually but only upon the property of the
Trust and that the Trustees are not liable for any action or failure to act, but
nothing in the Declaration of Trust protects a Trustee against any liability to
which he would otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office.
The Trust may, in the future, seek to achieve the Fund's investment
objective by investing all of the Fund's investable assets in a no-load,
diversified, open-end management investment company having substantially the
same investment objective as those applicable to the Fund. In such event, the
Fund would no longer directly require investment advisory services and therefore
would pay no investment advisory fees. Further, the administrative services fee
paid from the Fund would be reduced. Such an investment would be made only if
the Trustees believe that the aggregate per share expenses of the Fund and such
other investment company would be less than or approximately equal to the
expenses which the Fund would incur if the Trust were to continue to retain the
services of an investment adviser for the Fund and the assets of the Fund were
to continue to be invested directly in portfolio securities.
It is expected that the investment in another investment company will have
no preference, preemptive, conversion or similar rights, and will be fully paid
and non-assessable. It is expected that the investment company will not be
required to hold annual meetings of investors, but will hold special meetings of
investors when, in the judgment of its trustees, it is necessary or desirable to
submit matters for an investor vote. It is expected that each investor will be
entitled to a vote in proportion to the share of its investment in such
investment company. Except as described below, whenever the Trust is requested
to vote on matters pertaining to the investment company, the Trust would hold a
meeting of the Fund's shareholders and would cast its votes on each matter at a
meeting of investors in the investment company proportionately as instructed by
the Fund's shareholders.
However, subject to applicable statutory and regulatory requirements, the
Trust would not request a vote of the Fund's shareholders with respect to (a)
any proposal relating to the investment company in which the Fund's assets were
invested, which proposal, if made with respect to the Fund, would not require
the vote of the shareholders of the Fund, or (b) any proposal with respect to
the investment company that is identical, in all material respects, to a
proposal that has previously been approved by shareholders of the Fund.
PORTFOLIO BROKERAGE TRANSACTIONS
Brown Brothers Harriman & Co., as Investment Adviser, places orders for
all purchases and sales of portfolio securities, enters into repurchase and
reverse repurchase agreements and executes loans of portfolio securities.
Fixed-income securities are generally traded at a net price with dealers acting
as principal for their own account without a stated commission. The price of the
security usually includes a profit to the dealer. In underwritten offerings,
securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. On occasion, certain money market instruments may be
purchased directly from an issuer, in which case no commissions or discounts are
paid.
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 best execution, including lower brokerage
commissions, if appropriate. In such event, allocation of the securities so
purchased or sold as well as any expenses incurred in the transaction are made
by Brown Brothers Harriman & Co. in the manner it considers to be most equitable
and consistent with its fiduciary obligations to its customers, including the
Fund. In some instances, this procedure might adversely affect the Fund.
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.
ADDITIONAL INFORMATION
As used in this Statement of Additional Information and the 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 the independent auditors.
With respect to the securities offered by the Prospectus, this Statement
of Additional Information and the Prospectus do not contain all the information
included in the Registration Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933. Pursuant to the rules and
regulations of the Securities and Exchange Commission, certain portions have
been omitted. The Registration Statement including the exhibits filed therewith
may be examined at the office of the Securities and Exchange Commission in
Washington, D.C. or by calling 1-202-942-8090. Additionally, this information is
available on the EDGAR database at the SEC's internet site at
http://www.sec.gov. A copy may be obtained, after paying a duplicating fee, by
electronic request at the following email address: [email protected].
Statements contained in this Statement of Additional Information and the
Prospectus concerning the contents of any contract or other document are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement. Each such statement is qualified in all respects by such reference.
A copy of the Declaration of Trust establishing the Trust is on file in
the office of the Secretary of the Commonwealth of Massachusetts.
FINANCIAL STATEMENTS
The Annual Report of the Fund for the fiscal year ended June 30, 2000
has been filed with the Securities and Exchange Commission pursuant to Section
30(b) of the 1940 Act and Rule 30b2-1 thereunder and is hereby incorporated
herein by reference. A copy the Annual Report will be provided, without charge,
to each person receiving this Statement of Additional Information.
<PAGE>
PART C
OTHER INFORMATION
ITEM 23 EXHIBITS:
(a) Amended and Restated Declaration of Trust of the
Registrant (10)
(a)(i) Designation of Series of The 59 Wall Street U.S. Treasury Money
Fund (10)
(a)(ii) Designation of Series of The 59 Wall Street Tax Free Short/Intermediate
Fixed Income Fund (10)
(a)(iv) Designation of Series of The 59 Wall Street Tax Exempt Money
Fund (11)
(b) By-Laws of the Registrant (10)
(c) Not Applicable
(d) Advisory Agreement with respect to The 59 Wall Street Money
Market Fund (7)
(d)(i) Advisory Agreement with respect to The 59 Wall Street U.S.
Treasury Money Fund (10)
(d)(ii) Advisory Agreement with respect to The 59 Wall Street Tax
Free Short/Intermediate Fixed Income Fund (8)
(d)(iii) Advisory Agreement with respect to The 59 Wall Street Tax Exempt
Money Fund (11)
(e) Distribution Agreement (2)
(f) Not Applicable
(g) Custody Agreement (1)
(g)(i) Transfer Agency Agreement (1)
(g)(ii) Transfer Agency Agreement with Forum Financial Services (13)
(h) Amended and Restated Administration Agreement (9)
(h)(i) Subadministrative Services Agreement (9)
(h)(ii) License Agreement (2)
(h)(iii) Shareholder Servicing Agreement (9)
(h)(iv) Eligible Institution Agreement (9)
(h)(v)(a) Form of Expense Reimbursement Agreement with respect to
The 59 Wall Street Money Market Fund (6)
(h)(v)(b) Form of Expense Reimbursement Agreement with respect to
The 59 Wall Street U.S. Treasury Money Fund (6)
(h)(v)(c) Form of Expense Reimbursement Agreement with respect to
The 59 Wall Street Tax Free Short/Intermediate Fixed Income
Fund (7)
(h)(v)(d) Expense Reimbursement Agreement with respect to
The 59 Wall Street Tax Exempt Money Fund (11)
(i) Opinion of Counsel (including consent) (12)
(j) Consent of independent auditors (13)
(k) Not Applicable
(l) Purchase Agreement (1)
(m) Not Applicable
(n) Not Applicable
(p) Not Applicable
16(a) Schedule of Computation of Performance Quotations
with respect to The 59 Wall Street Money Market Fund (5)
(b) Schedule of Computation of Performance Quotations
with respect to The 59 Wall Street U.S. Treasury Money
Fund (6)
(c) Schedule of Computation of Performance Quotations with
respect to The 59 Wall Street Tax Free
Short/Intermediate Fixed Income Fund (4)
17 Financial Data Schedule. (12)
(1) Filed with Amendment No. 1 to this Registration Statement
on October 28, 1983.
(2) Filed with Amendment No. 10 to this Registration Statement
on August 31, 1990.
(3) Filed with Amendment No. 11 to this Registration Statement
on February 14, 1991.
(4) Filed with Amendment No. 14 to this Registration Statement
on June 15, 1992.
(5) Filed with Amendment No. 15 to this Registration Statement
on October 27, 1992.
(6) Filed with Amendment No. 16 to this Registration Statement
on October 27, 1992.
(7) Filed with Amendment No. 17 to this Registration Statement
on September 3, 1993.
(8) Filed with Amendment No. 18 to this Registration Statement
on September 3, 1993.
(9) Filed with Amendment No. 19 to this Registration Statement
on September 3, 1993.
(10) Filed with Amendment No. 30 to this Registration Statement
on October 27, 1995.
(11) Filed with Amendment No. 41 to this Registration Statement
on November 30, 1998.
(12) Filed with Amendment No. 55 to this Registration Statement
on November 1, 1999.
(13) Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT.
See "Trustees and Officers" in the Statement of Additional Information
filed as part of this Registration Statement.
ITEM 25. INDEMNIFICATION.
As permitted by Section 17(h) of the Investment Company Act of 1940, as
amended (the "1940 Act"), and pursuant to Article VII of the Registrant's
By-Laws, officers, Trustees, employees and agents of the Registrant may be
indemnified against certain liabilities in connection with the Registrant. As
permitted by Section 17(i) of the 1940 Act, pursuant to Section 5 of the
Distribution Agreement, 59 Wall Street Distributors, Inc., as Distributor of
shares of each series of the Registrant, may be indemnified against certain
liabilities which it may incur. Such Article VII of the By-Laws and Section 5 of
the Distribution Agreement are hereby incorporated by reference in their
entirety.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to Trustees, officers and
controlling persons of the Registrant and the principal underwriter pursuant to
the foregoing provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a Trustee,
officer of controlling person of the Registrant or the principal underwriter in
connection with the successful defense of any action, suit or proceeding) is
asserted against the Registrant by such Trustee, officer or controlling person
or the principal underwriter in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The investment adviser of the Registrant's Money Market Fund, Brown
Brothers Harriman & Co. ("BBH & Co."), is a New York limited partnership. BBH &
Co. conducts a general banking business and is a member of the New York Stock
Exchange, Inc.
To the knowledge of the Registrant, none of the general partners or
officers of BBH & Co. is engaged in any other business, profession, vocation or
employment of a substantial nature.
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) 59 Wall Street Distributors, Inc. ("59 Wall Street
Distributors") and its affiliates also serve as
administrator and/or distributor to other registered
investment companies.
(b) Set forth below are the names, principal business
addresses and positions of each Director and officer of
59 Wall Street Distributors. The principal business
address of these individuals is c/o 59 Wall Street
Distributors, Inc., 21 Milk Street, Boston, MA
02109. Unless otherwise specified, no officer or
Director of 59 Wall Street Distributors serves as an
officer or Trustee of the Registrant.
PHILIP W. COOLIDGE: President, Chief Executive Officer and Director of 59 Wall
Street Distributors. President of Registrant.
MOLLY S. MUGLER: Secretary of 59 Wall Street Distributors. Secretary
of the Registrant.
LINWOOD C. DOWNS:Treasurer of 59 Wall Street Distributors. Assistant
Treasurer of the Registrant.
CHRISTINE D. DORSEY: Assistant Secretary of the Registrant.
SUSAN JAKUBOSKI: Assistant Treasurer of 59 Wall Street Distributors. Assistant
Treasurer of the Registrant.
ROBERT G. DAVIDOFF: Director of 59 Wall Street Distributors; CMNY Capital, L.P.,
135 East 57th Street, New York, NY 10022.
DONALD S. CHADWICK: Director of 59 Wall Street Distributors; 4609 Bayard Street,
Apartment 411, Pittsburgh, PA 15213.
LEEDS HACKETT: Director of 59 Wall Street Distributors; Hackett Associates
Limited, 1260 Avenue of the Americas, 12th Floor, New York, NY 10020.
LAURENCE B. LEVINE: Director of 59 Wall Street Distributors; Blair Corporation,
250 Royal Palm Way, Palm Beach, FL 33480.
(c) Not Applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules thereunder are maintained at the
offices of:
The 59 Wall Street Trust
59 Wall Street Distributors, Inc.
59 Wall Street Administrators, Inc.
21 Milk Street
Boston, MA 02109
(subadministrator and distributor)
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
(investment adviser)
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
(custodian)
Forum Financial Services, LLC
Two Portland Square
Portland, ME 04101
(transfer agent)
ITEM 29. MANAGEMENT SERVICES.
Other than as set forth under the caption "Management of the Trust" in
the Prospectus constituting Part A of this Registration Statement, Registrant is
not a party to any management-related service contract.
ITEM 30. UNDERTAKINGS.
(a) If the information called for by Item 5A of Form N-1A is
contained in the latest annual report to shareholders, the
Registrant shall furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report
to shareholders upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirement for effectiveness of this registration statement under Rule
485(b) under the Securities Act and has duly caused this amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Boston and Commonwealth of Massachusetts on the
29th day of September, 2000.
THE 59 WALL STREET TRUST
By /s/PHILIP W. COOLIDGE
(Philip W. Coolidge, President)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated above.
SIGNATURE TITLE
Trustee and
/s/JOSEPH V. SHIELDS, JR. Chairman of the Board
(J.V. Shields, Jr.)
President (Principal
/s/PHILIP W. COOLIDGE Executive Officer)
(Philip W. Coolidge)
/s/EUGENE P. BEARD Trustee
(Eugene P. Beard)
/s/DAVID P. FELDMAN Trustee
(David P. Feldman)
/s/ARTHUR D. MILTENBERGER Trustee
(Arthur D. Miltenberger)
/s/ALAN G. LOWY Trustee
(Alan G. Lowy)
/s/RICHARD L. CARPENTER Trustee
(Richard L. Carpenter)
/s/CLIFFORD A. CLARK Trustee
(Clifford A. Clark)
/s/DAVID M. SEITZMAN Trustee
(David M. Seitzman)
Treasurer (Principal
/s/LINWOOD C. DOWNS Financial and Principal
(Linwood C. Downs) Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
EX-99.(g)(ii) Transfer Agency Agreement with Forum Financial
EX-99.(j) Consent of independent auditors
