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PROSPECTUS
The 59 Wall Street European Equity Fund
The 59 Wall Street Pacific Basin Equity Fund
6 St. James Avenue, Boston, Massachusetts 02116
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The 59 Wall Street European Equity Fund and The 59 Wall Street Pacific
Basin Equity Fund are separate portfolios of The 59 Wall Street Fund, Inc.
Shares of each Fund are offered by this Prospectus.
The European Equity Fund and the Pacific Basin Equity Fund are each
designed to enable investors to participate in the opportunities available in
foreign equity markets. The investment objective of each Fund is to provide
investors with long-term maximization of total return, primarily through capital
appreciation. There can be no assurance that a Fund's investment objective will
be achieved.
Investments in the Funds are neither insured nor guaranteed by the U.S.
Government. Shares of the Funds are not deposits or obligations of, or
guaranteed by, Brown Brothers Harriman & Co. 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.
Brown Brothers Harriman & Co. is the investment adviser to, the
administrator of and the shareholder servicing agent for each Fund. Shares of
the Funds are offered at net asset value and without a sales charge to customers
of Brown Brothers Harriman & Co. and to other investors of means who can assume
the risk involved in investing in equity securities of foreign-based companies.
This Prospectus, which investors are advised to read and retain for future
reference, sets forth concisely the information about each Fund that a
prospective investor ought to know before investing. Additional information
about each Fund has been filed with the Securities and Exchange Commission in a
Statement of Additional Information, dated March 1, 1995. This information is
incorporated herein by reference and is available without charge upon request
from the Funds' distributor, 59 Wall Street Distributors, Inc., 6 St. James
Avenue, Boston, Massachusetts 02116.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is March 1, 1995.
<PAGE>
TABLE OF CONTENTS
Page
----
Expense Table.................................. 3
Financial Highlights............................ 4
Investment Objective and Policies.............. 5
Investment Restrictions........................ 11
Purchase of Shares.............................. 11
Redemption of Shares........................... 12
Management of the Corporation................... 13
Net Asset Value................................ 17
Dividends and Distributions.................... 17
Taxes.......................................... 17
Description of Shares.......................... 19
Additional Information ......................... 20
Appendix........................................ 21
TERMS USED IN THIS PROSPECTUS
Corporation................... The 59 Wall Street Fund, Inc.
Funds......................... The 59 Wall Street European Equity Fund
(the "European Equity Fund")
The 59 Wall Street Pacific Basin Equity Fund
(the "Pacific Basin Equity Fund")
Investment Adviser and
Administrator............. Brown Brothers Harriman & Co.
Subadministrator.............. 59 Wall Street Administrators, Inc.
("59 Wall Street Administrators")
Distributor................... 59 Wall Street Distributors, Inc.
("59 Wall Street Distributors")
1940 Act...................... The Investment Company Act of 1940,
as amended
2
<PAGE>
EXPENSE TABLE
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The following table provides (i) a summary of estimated expenses relating
to purchases and sales of shares of each Fund, and the aggregate annual
operating expenses of each Fund, as a percentage of average net assets of that
Fund, and (ii) an example illustrating the dollar cost of such estimated
expenses on a $1,000 investment in each Fund.
SHAREHOLDER TRANSACTION EXPENSES
European Pacific Basin
Equity Fund Equity Fund
----------- -----------
Sales Load Imposed on Purchases .............. None None
Sales Load Imposed on Reinvested Dividends ... None None
Deferred Sales Load .......................... None None
Redemption Fee ............................... None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
European Pacific Basin
Equity Fund Equity Fund
----------- -------------
Investment Advisory Fee ............................ 0.65% 0.65%
12b-1 Fee .......................................... None None
Other Expenses
Administration Fee ............................... 0.15% 0.15%
Shareholder Servicing/Eligible Institution Fee ... 0.25 0.25
Other Expenses ................................... 0.25 0.65 0.20 0.60
---- ---- ---- ----
Total Fund Operating Expenses ...................... 1.30% 1.25%
==== ====
Example 1 year 3 years 5 years 10 years
------- ------ ------- ------- --------
European Equity Fund: A shareholder of the
Fund would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return, and (2) redemption at the end of
each time period:......................... $13 $41 $71 $157
--- --- --- ----
Pacific Basin Equity Fund: A shareholder
of the Fund would pay the following
expenses on a $1,000 investment, assuming
(1) 5% annual return, and (2) redemption
at the end of each time period:........... $13 $40 $69 $151
--- --- --- ----
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. In connection
with the Example, please note that $1,000 is currently less than each Fund's
minimum purchase requirement. The purpose of this table is to assist investors
in understanding the various costs and expenses that shareholders of each Fund
bear directly or indirectly.
For more information with respect to the expenses of each Fund see
"Management of the Corporation" herein.
3
<PAGE>
FINANCIAL HIGHLIGHTS
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The following information has been audited by Deloitte & Touche LLP,
independent auditors. This information should be read in conjunction with the
financial statements and notes thereto, which appear in the Statement of
Additional Information. The ratios of expenses and net investment income to
average net assets are not indicative of future ratios.
<TABLE>
<CAPTION>
European Equity Fund Pacific Basin Equity Fund
----------------------------------------- ----------------------------------------
For the years ended October 31, For the years ended October 31,
----------------------------------------- ----------------------------------------
1994 1993 1992 1991 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year ............... $ 31.17 $ 27.15 $ 25.35 $ 25.00 $ 39.87 $ 27.53 $ 27.65 $ 25.00
Income from invest-
ment operations:
Net investment
income ......................... 0.39 0.21 0.29 0.31 0.14 0.14 0.12 0.10
Net realized and
unrealized gain ................ 1.80 6.09 1.74 0.04 1.26 13.18 0.33 2.55
Less dividends and
distributions:
Dividends to share-
holders from net
investment income .............. (0.25) (0.36) (0.23) -- (0.14) (0.02) (0.18) --
Distributions to share-
holders from net
realized gains ................. (1.29) (1.91) -- -- (1.28) (0.96) (0.39) --
Distributions to share-
holders in excess of
net realized gains ............. -- (0.01) -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end
of year ......................... $ 31.82 $ 31.17 $ 27.15 $ 25.35 $ 39.85 $ 39.87 $ 27.53 $ 27.65
========= ========= ========= ========= ========= ========= ========= =========
Total investment
return .......................... 7.35% 24.82% 7.87% 1.60% 3.48% 50.01% 1.68% 10.68%
Ratios/Supplemental
Data:
Net assets, end of
period (000's
omitted)........................ $ 110,632 $ 88,860 $ 27,426 $ 14,231 $ 120,469 $ 92,863 $ 31,250 $ 20,492
Ratio of expenses to
average net assets ............... 1.37% 1.50% 1.50% 1.50% 1.29% 1.50% 1.50% 1.50%
Ratio of net invest-
ment income to
average net assets ............... 1.30% 1.28% 1.71% 1.54% 0.39% 0.62% 0.43% 0.64%
Portfolio turnover rate ........... 124% 37% 50% 58% 86% 79% 84% 56%
</TABLE>
Further information about performance of the Funds is contained in the
Funds' annual report to shareholders which may be obtained without charge.
4
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
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The investment objective of each Fund is to provide investors with
long-term maximization of total return, primarily through capital appreciation.
The investment objective of each Fund is a fundamental policy and may be
changed only with the approval of the holders of a "majority of that Fund's
outstanding voting securities as defined in the 1940 Act". (See "Additional
Information" in this Prospectus.) However, the investment policies of each Fund
as described below are not fundamental and may be changed without such approval.
The assets of the European Equity Fund under normal circumstances are fully
invested in equity securities of companies based in the European Economic
Community (Germany, France, Italy, United Kingdom, Spain, Netherlands, Belgium,
Denmark, Greece, Portugal, Ireland, Luxembourg), as well as Switzerland,
Austria, Norway, Sweden, Finland, Turkey, the Czech Republic, Slovakia, Hungary,
Poland and Romania, although no more than 5% of that Fund's assets is invested
in securities of any single Eastern European country. The following table is a
comparison of market capitalization, Gross Domestic Product (GDP) and population
of European countries.
EUROPEAN STATISTICS
<TABLE>
<CAPTION>
Market Gross Domestic
Capitalization Product Population
------------------------- ------------------------ -----------------------
Dollars % of Dollars % of % of
(Billions) Total (Billions) Total (Millions) Total
---------- ----- ---------- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
EUROPEAN UNION
- --------------
UNITED KINGDOM ............................. 731 34.2 941 12.8 58 11.5
GERMANY .................................... 300 14.0 1,713 23.2 81 16.0
FRANCE ..................................... 266 12.4 1,253 17.0 58 11.5
NETHERLANDS ................................ 168 7.8 309 4.2 15 3.0
ITALY ...................................... 103 4.8 1,007 13.7 57 11.3
SWEDEN ..................................... 76 3.5 186 2.5 9 1.8
SPAIN ...................................... 74 3.5 478 6.5 39 7.7
BELGIUM .................................... 49 2.3 206 2.8 10 2.0
DENMARK .................................... 35 1.6 135 1.8 5 1.0
FINLAND .................................... 27 1.3 83 1.1 5 1.0
AUSTRIA .................................... 18 0.8 181 2.5 8 1.6
IRELAND .................................... 13 0.6 47 0.6 4 0.8
PORTUGAL ................................... 8 0.4 78 1.1 10 2.0
GREECE ..................................... 8 0.4 74 1.0 10 2.0
LUXEMBOURG ................................. 4 0.2 10 0.1 1 0.2
----- ----- ----- ----- --- -----
SUBTOTAL ................................. 1,880 87.8 6,701 90.9 370 73.3*
OTHER WESTERN EUROPE
- --------------------
SWITZERLAND ................................ 215 10.1 234 3.2 7 1.4
NORWAY ..................................... 20 0.9 103 1.4 4 0.8
TURKEY ..................................... 9 0.4 173 2.3 60 11.9
----- ----- ----- ----- --- -----
SUBTOTAL ................................. 244 11.4 510 6.9 71 14.1
WESTERN EUROPE TOTAL ......................... 2,124 99.2 7,211 97.9* 441 87.3*
EASTERN EUROPE
- --------------
CZECH REPUBLIC ............................. 14 0.7 32 0.4 16 3.2
POLAND ..................................... 3 0.1 89 1.2 38 7.5
HUNGARY .................................... 1 0.0 36 0.5 10 2.0
----- ----- ----- ----- --- -----
SUBTOTAL ................................. 18 0.8 157 2.1 64 12.7
----- ----- ----- ----- --- -----
EUROPE TOTAL ................................. 2,142 100.0 7,368 100.0 505 100.0
===== ===== ===== ===== === =====
</TABLE>
Sources: I.M.F., I.F.C., E.I.U. Country Reports
GDP and population data as of 1993; market capitalization data as of
December 31, 1994, except for Eastern Europe which is as of June 30,
1994.
- ----------
* Figures in column do not add because of rounding.
5
<PAGE>
The assets of the Pacific Basin Equity Fund under normal circumstances are
fully invested in equity securities of companies based in Pacific Basin
countries, including Japan, Hong Kong, Australia, Malaysia, Singapore, South
Korea, Taiwan, Thailand, India, Philippines, Indonesia, New Zealand, China,
Pakistan, Sri Lanka and Bangladesh. The following table is a comparison of
market capitalization, GDP and population of Pacific Basin countries.
PACIFIC BASIN STATISTICS
<TABLE>
<CAPTION>
Market Gross Domestic
Capitalization Product Population
-------------------------- -------------------------- -----------------------
Dollars % of Dollars % of % of
(Billions) Total (Billions) Total (Millions) Total
---------- ----- ---------- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
JAPAN .............................. 2,146 69.6 4,216 65.2 125 4.3
TAIWAN ............................. 145 4.7 216 3.4 21 0.7
HONG KONG .......................... 137 4.5 110 1.7 6 0.2
AUSTRALIA .......................... 125 4.1 284 4.4 18 0.6
SOUTH KOREA ........................ 114 3.7 331 5.1 44 1.5
MALAYSIA ........................... 106 3.4 61 0.9 19 0.7
THAILAND ........................... 71 2.3 115 1.8 59 2.0
SINGAPORE .......................... 57 1.8 55 0.9 3 0.1
INDIA .............................. 52 1.7 227 3.5 892 30.9
CHINA .............................. 47 1.5 545 8.4 1,185 41.0
PHILIPPINES ........................ 30 1.0 54 0.8 65 2.3
INDONESIA .......................... 28 0.9 126 1.9 190 6.6
NEW ZEALAND ........................ 17 0.6 44 0.7 3 0.1
PAKISTAN ........................... 6 0.2 48 0.7 121 4.2
SRI LANKA .......................... 1 0.0 10 0.2 17 0.6
BANGLADESH ......................... N/A N/A 25 0.4 122 4.2
----- ----- ----- ----- ----- -----
TOTAL .............................. 3,082 100.0 6,467 100.0 2,890 100.0
===== ===== ===== ===== ===== =====
</TABLE>
Sources: I.M.F., I.F.C., E.I.U. Country Reports.
GDP and population data as of 1993; market capitalization data as of
December 31, 1994.
Although the assets of each of the Funds are expected to be invested
primarily in common stocks, other securities with equity characteristics may be
purchased, including securities convertible into common stock, corporation or
limited partnership interests, rights and warrants. These equity securities may
be purchased directly or in the form of American Depository Receipts, European
Depository Receipts or other similar securities representing securities of
foreign-based companies. Although each of the Funds invests primarily in equity
securities which are traded on foreign or domestic securities exchanges, equity
securities which are traded in foreign or domestic over-the-counter markets may
be purchased for each of the Funds. (See "Investment Restrictions".)
The Investment Adviser uses the investment research and economic studies
made available to it by leading banks and brokers around the world, as well as
the analysis and judgment of the investment professionals in its New York, Tokyo
and London offices, to allocate the assets of each Fund among the countries in
6
<PAGE>
which a Fund may invest and to identify market sectors, industries and companies
with favorable prospects.
Criteria for determining the appropriate allocation of investments among
various countries focus on liquidity conditions, valuation levels, earnings
growth potential, and technical factors. Included among these criteria are the
more traditional analyses of relative economic growth, expected levels of
inflation, currency prospects and government policies. In response to changes or
anticipated changes in these criteria, a particular country's representation in
a Fund's portfolio is increased, decreased or eliminated. As a result of
applying these criteria a Fund's assets are allocated among countries in a
manner which does not reflect the relative size or valuation of a country's
capital market or a country's relative GDP or population.
In constructing the portfolio of securities of each Fund, emphasis is
placed on the equity securities of larger companies with strong longer term
fundamentals such as leading industry position, effective management,
competitive products and services, high or improving return on investment and a
sound financial structure. Selection of individual equities is the product of a
disciplined process which systematically evaluates growth expectations relative
to price levels.
Foreign Currency Exchange Transactions. Because securities denominated in
currencies other than the U.S. dollar are bought and sold for the Funds, and
interest, dividends and sale proceeds are received by each of the Funds in
currencies other than the U.S. dollar, foreign currency exchange transactions
from time to time are entered into for the Funds to convert to and from
different foreign currencies and to convert foreign currencies to and from the
U.S. dollar.
These transactions are agreements to exchange currencies at a specific rate
either for settlement two days thereafter (i.e., spot market or spot contracts)
or for settlement on a future date (i.e., forward contracts). Forward contracts
may be entered into only in an attempt to protect against possible changes in
foreign currency exchange rates that would adversely affect a portfolio position
or an anticipated portfolio position. At any time the effect of future changes
in the foreign exchange rate arising from an outstanding forward contract can be
offset by entering into an offsetting forward contract expiring on the same
date.
These foreign exchange contracts are made with currency dealers, usually
large commercial banks and financial institutions. Although foreign exchange
rates are volatile, foreign exchange markets are generally liquid with the
equivalent of approximately $500 billion traded worldwide on a typical day. Spot
contracts and forward contracts generally have no deposit requirements and are
traded at a net price without commission.
Since consideration of the prospect for currency parities are incorporated
into the Investment Adviser's long-term investment decisions, foreign currency
hedging transactions with respect to portfolio security positions are not
routinely entered into for either Fund. However, the Investment Adviser believes
that it is important to have the flexibility to enter into foreign currency
hedging transactions when it determines that the transactions would be in a
Fund's best interest, including the closing out or offsetting of an existing
position.
Although these transactions may reduce the risk of loss due to a decline in
the value of the hedged currency, they also tend to limit the potential for
gain. The precise matching of the forward contract amounts and the value of the
securities involved is not generally possible because the future value of such
securities in foreign currencies changes as a consequence of market movements in
the value of such securities between the date the forward contract is entered
into and the date it matures. The projection of currency market movements is
extremely difficult, and the successful execution of a hedging strategy is
highly unlikely.
Neither spot nor forward foreign exchange contracts eliminate fluctuations
in the prices of a Fund's portfolio securities or in foreign exchange rates, or
prevent loss if the prices of these securities should decline.
The Corporation may, in the future, seek to achieve each Fund's investment
objective by investing all of the Fund's assets in a no-load, diversified,
open-end management investment company having substantially the same investment
7
<PAGE>
objective as the Fund. Shareholders will receive 30 days prior written notice
with respect to any such investment.
Risk Factors. Investing in equity securities of foreign-based companies
involves risks not typically associated with investing in equity securities of
companies organized and operated in the United States. The value of the
investments of the Funds may be adversely affected by changes in political or
social conditions, diplomatic relations, confiscatory taxation, expropriation,
nationalization, limitation on the removal of funds or assets, or imposition of
(or change in) exchange control or tax regulations. In addition, changes in
government administrations or economic or monetary policies in the United States
or abroad could result in appreciation or depreciation of portfolio securities
and could favorably or unfavorably affect a Fund's operations. Furthermore, the
economies of individual foreign nations differ from the U.S. economy, whether
favorably or unfavorably, in areas such as growth of GDP, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments
position; it may also be more difficult to obtain and enforce a judgment against
a foreign company. The foreign investments made for either Fund are made in
compliance with the currency regulations and tax laws of the United States and
foreign governments. There may also be foreign government regulations and laws
which restrict the amounts and types of foreign investments.
Because foreign securities generally are denominated and pay dividends or
interest in foreign currencies, and each Fund holds various foreign currencies
from time to time, the value of the net assets of each Fund as measured in U.S.
dollars is affected favorably or unfavorably by changes in exchange rates. Each
Fund also incurs costs in connection with conversion between various currencies.
In general, less information is publicly available with respect to
foreign-based companies than is available with respect to U.S. companies. Most
foreign-based companies are also not subject to the uniform accounting and
financial reporting requirements applicable to companies based in the United
States.
In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of the New York Stock Exchange. Accordingly, the investments of each
Fund are less liquid and their prices are more volatile than comparable
investments in securities of U.S. companies. Moreover, the settlement periods
for foreign securities, which are often longer than those for securities of U.S.
companies, may affect portfolio liquidity. In buying and selling securities on
foreign exchanges, fixed commissions are normally paid that are generally higher
than the negotiated commissions charged in the United States. In addition, there
is generally less government supervision and regulation of securities exchanges,
brokers and companies in foreign countries than in the United States.
Special Risks Concerning Eastern Europe and Developing Countries. The
European Equity Fund may invest in securities of issuers based in Eastern Europe
and in developing countries. The Pacific Basin Equity Fund may invest a
substantial portion of its assets in the securities of issuers based in
developing countries. These investments may be subject to potentially greater
risks than those of other foreign issuers. These risks include: (i) potentially
less social, political and economic stability; (ii) the small current size of
the markets for such securities and the low volume of trading, which result in
less liquidity and in greater price volatility; (iii) certain national policies
which may restrict the Funds' investment opportunities, including restrictions
on investment in issuers or industries deemed sensitive to national interests;
(iv) foreign taxation; (v) the absence of fully developed legal structures
governing private or foreign investment or allowing for judicial redress for
injury to private property; (vi) the absence, until recently of a capital market
structure or market oriented economy as well as issuers without a long period of
successful operations; and (vii) the possibility that recent favorable economic
developments may be slowed or reversed by unanticipated political or social
events in such countries or their neighboring countries.
8
<PAGE>
Investments in such countries may involve risks of nationalization,
expropriation and confiscatory taxation. The governments of some of these
countries expropriated large amounts of private property in the past, in many
cases without adequate compensation, and there may be no assurance that such
expropriation will not occur in the future. In the event of such expropriation,
a Fund could lose a substantial portion of any investments it has made in the
affected countries. Further, less well developed accounting standards exist in
some of these countries. Finally, even though currencies may be currently
convertible into U.S. dollars, the conversion rates may be artificial to the
actual market values and may be adverse to each Fund's shareholders.
Hedging Strategies
Subject to applicable laws and regulations and solely as a hedge against
changes in the market value of portfolio securities or securities intended to be
purchased, put and call options on stock indices may be purchased for a Fund.
Put and call options on currency may also be purchased for the Funds for the
sole purpose of reducing risk. (See Appendix on page 21 for more detail.)
For the same purpose, put and call options on stocks may be purchased and
futures contracts on stock indexes may be entered into for a Fund, although in
each case the current intention is not to do so in such a manner that more than
5% of a Fund's net assets would be at risk.
Put and call option contracts may be purchased for a Fund only to the
extent permitted by the policies of state securities authorities in states in
which shares of that Fund are qualified for offer and sale. Over- the-counter
options ("OTC Options") purchased are treated as not readily marketable. (See
"Investment Restrictions".)
Portfolio Brokerage
The portfolio of each of the Funds is managed actively in pursuit of its
investment objective. Securities are not traded for short-term profits but, when
circumstances warrant, securities are sold without regard to the length of time
held. A 100% annual turnover rate would occur, for example, if all securities in
a Fund's portfolio (excluding short-term obligations) were replaced once in a
period of one year. Due to fluctuating market conditions in the European
Economic Community, the portfolio turnover rate for the European Equity Fund
increased from 37% to 124% for the fiscal year ended October 31, 1994. For the
same time period, the portfolio turnover rate for the Pacific Basin Equity Fund
was 86%. The amount of brokerage commissions and taxes on realized capital gains
to be borne by the shareholders of a Fund tend to increase as the level of
portfolio activity increases.
In effecting securities transactions for a Fund, the Investment Adviser
seeks to obtain the best price and execution of orders. In selecting a broker,
the Investment Adviser considers a number of factors including: the broker's
ability to execute orders without disturbing the market price; the broker's
reliability for prompt, accurate confirmations and on-time delivery of
securities; the broker's financial condition; and the commissions charged.
The Investment Adviser may direct a portion of a Fund's securities
transactions to certain unaffiliated brokers which in turn use a portion of the
commissions they receive from that Fund to pay other unaffiliated service
providers on behalf of that Fund for services provided for which that Fund would
otherwise be obligated to pay. Such commissions paid by a Fund are at the same
rate paid to other brokers for effecting similar transactions in listed equity
securities.
All of the transactions for the Funds are executed through qualified
brokers other than Brown Brothers Harriman & Co. In selecting such brokers, the
Investment Adviser considers the quality and reliability of brokerage services,
including execution capability and performance and financial responsibility, and
may consider the research and other investment information provided by such
brokers. Accordingly, the commissions charged by any such broker may be greater
than the amount another firm might charge if the Investment Adviser determines
in good faith that the amount of such commissions is reasonable in relation to
the value of the brokerage services and research information provided by such
broker.
9
<PAGE>
On those occasions when Brown Brothers Harriman & Co. deems the purchase or
sale of a security to be in the best interests of a 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 that 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
Funds. In some instances, this procedure might adversely affect a Fund.
Other Investment Techniques
Short-Term Instruments. The assets of each Fund may be invested in non-U.S.
dollar denominated and U.S. dollar denominated short-term instruments, including
U.S. dollar denominated repurchase agreements. Cash is held for each Fund in
demand deposit accounts with the Funds' custodian bank.
Restricted Securities. Securities that have legal or contractual
restrictions on their resale may be acquired for a Fund. The price paid for
these securities, or received upon resale, may be lower than the price paid or
received for similar securities with a more liquid market. Accordingly, the
valuation of these securities for a Fund reflects any limitation on their
liquidity. (See "Investment Restrictions".)
Loans of Portfolio Securities. Loans up to 30% of the total value of the
securities of a Fund are permitted. These loans must be secured continuously by
cash or equivalent collateral or by an irrevocable letter of credit in favor of
a Fund at least equal at all times to 100% of the market value of the securities
loaned plus accrued income. By lending the securities of a Fund, that Fund's
income can be increased by that Fund's continuing to receive income on the
loaned securities as well as by the opportunity for that Fund to receive
interest on the collateral. Any appreciation or depreciation in the market price
of the borrowed securities which occurs during the term of the loan inures to
that Fund and its shareholders.
When-Issued and Delayed Delivery Securities. Securities may be purchased
for a Fund on a when- issued or delayed delivery basis. For example, delivery
and payment may take place a month or more after the date of the transaction.
The purchase price and the interest rate payable on the securities, if any, are
fixed on the transaction date. The securities so purchased are subject to market
fluctuation and no income accrues to a Fund until delivery and payment take
place. At the time the commitment to purchase securities for a 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
that Fund's net asset value. At the time of its acquisition, a when-issued or
delayed delivery security may be valued at less than the purchase price.
Commitments for such when-issued or delayed delivery securities are made only
when there is an intention of actually acquiring the securities. On delivery
dates for such transactions, such obligations are met from maturities or sales
of securities and/or from cash flow. If the right to acquire a when-issued or
delayed delivery security is disposed of prior to its acquisition, a Fund could,
as with the disposition of any other portfolio obligation, incur a gain or loss
due to market fluctuation. When-issued or delayed delivery commitments for a
Fund may not be entered into if such commitments exceed in the aggregate 15% of
the market value of that Fund's total assets, less liabilities other than the
obligations created by when-issued or delayed delivery commitments.
Investment Company Securities. Subject to applicable statutory and
regulatory limitations, the assets of each Fund may be invested in shares of
other investment companies. Under the 1940 Act, assets of either Fund may be
invested in shares of other investment companies in connection with a merger,
consolidation, acquisition or reorganization or if immediately after such
investment (i) 10% or less of the market value of that Fund's total assets would
be so invested, (ii) 5% or less of the market value of that Fund's total assets
would be invested in the shares of any one such company, and (iii) 3% or less of
the total outstanding voting stock of any other investment company would be
owned by that Fund.
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INVESTMENT RESTRICTIONS
================================================================================
The Statement of Additional Information for the Funds includes a listing of
the specific investment restrictions which govern each Fund's investment
policies. Certain of these investment restrictions are deemed fundamental
policies and may be changed only with the approval of the holders of a "majority
of a Fund's outstanding voting securities as defined in the 1940 Act" (see
"Additional Information" in this Prospectus), including a restriction that
excluding a Fund's investment of all of its investable assets in an open-end
investment company with substantially the same investment objective as the Fund,
not more than 10% of the net assets of a Fund may be invested in securities that
are subject to legal or contractual restrictions on resale.
As a non-fundamental policy, money is not borrowed for a Fund in an amount
in excess of 10% of the assets of that Fund. Money is borrowed only from banks
and only either to accommodate requests for the redemption of shares while
effecting an orderly liquidation of portfolio securities or to maintain
liquidity in the event of an unanticipated failure to complete a portfolio
security transaction or other similar situations. Securities are not purchased
for a Fund at any time at which the amount of its borrowings exceed 5% of its
assets.
Also as a non-fundamental policy, at least 65% of the value of the total
assets of each Fund is invested in equity securities of companies based in
countries in which that Fund may invest. For these purposes, equity securities
are defined as common stock, securities convertible into common stock,
corporation or limited partnership interests, rights and warrants, and include
securities purchased directly and in the form of American Depository Receipts,
European Depository Receipts or other similar securities representing common
stock of foreign-based companies.
In accordance with applicable regulations, a Fund does not purchase any
restricted security, OTC option, repurchase agreement maturing in more than
seven days, security of a foreign issuer which is not listed on a recognized
domestic or foreign securities exchange, security of a company which, including
predecessors, has a record of less than three years of operations, or other
security that is not readily marketable, if after such purchase more than 10% of
the market value of that Fund's net assets would be represented by such
investments.
PURCHASE OF SHARES
================================================================================
An investor may open a Fund account only through 59 Wall Street
Distributors, the Funds' exclusive Distributor. The Funds' Shareholder Servicing
Agent (see page 15) and each Eligible Institution (see page 15) may establish
and amend from time to time a minimum initial and a minimum subsequent purchase
requirement for their respective customers. The Corporation reserves the right
to determine the purchase orders for Fund shares that it will accept.
Shares of each Fund are offered on a continuous basis at their net asset
value without a sales charge. Shares of each Fund may be purchased on any day
the New York Stock Exchange is open for regular trading if the Corporation
receives the purchase order and acceptable payment for such order prior to 4:00
P.M., New York time. Purchases of Fund shares are then executed at the net asset
value per share next determined on that same day.
An investor who has a custody account with Brown Brothers Harriman & Co.
may place purchase orders for Fund shares with the Corporation through Brown
Brothers Harriman & Co., which as an Eligible Institution holds such shares in
its name on behalf of that customer. For such a customer, Brown Brothers
Harriman & Co. arranges for the payment of the purchase price of Fund shares.
Brown Brothers Harriman & Co. has established for its customers a minimum
initial and a minimum subsequent purchase requirement for each Fund of $5,000,
except that the minimum initial and minimum subsequent purchase requirements for
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<PAGE>
individual retirement accounts, 401(k) plans and defined contribution plans are
$1,000.
An investor who does not have a custody account with Brown Brothers
Harriman & Co. must place purchase orders for Fund shares with the Corporation
through the Funds' Shareholder Servicing Agent. Such an investor has such shares
held directly in the investor's name on the books of the Corporation and is
responsible for arranging for the payment of the purchase price of Fund shares.
All purchase orders for initial and subsequent purchases are executed at the net
asset value per share next determined after the Corporation's custodian, State
Street Bank and Trust Company, has received payment in the form of a cashier's
check drawn on a U.S. bank or a check certified by a U.S. bank, a wire transfer
or a duly authorized bank guarantee that immediately available funds are
transferred to the Corporation on the fifth business day after the purchase
order has been executed. For purposes of determining the payment date, a
business day is a day on which banks in the State of New York are open for
business. Brown Brothers Harriman & Co., the Funds' Shareholder Servicing Agent
has established a minimum initial purchase requirement and a minimum subsequent
purchase requirement for each Fund of $25,000 and $10,000, respectively.
Inquiries regarding the manner in which purchases of Fund shares may be effected
and other matters pertaining to the Funds should be directed to Brown Brothers
Harriman & Co., the Funds' Shareholder Servicing Agent. (See back cover for
address and phone number.)
Shares of each Fund may be purchased by exchanging securities acceptable to
the Corporation for shares of either of the Funds. The Corporation does not
accept a security in exchange for Fund shares unless (a) the security is
consistent with the investment objective and policies of the Fund for whose
shares the security is being exchanged, and (b) the security is deemed
acceptable by the Investment Adviser. Securities offered in exchange for shares
of either Fund are valued in accordance with the usual valuation procedures for
the Funds. (See "Net Asset Value" on page 17.)
REDEMPTION OF SHARES
================================================================================
Shares held by Brown Brothers Harriman & Co. on behalf of a shareholder may
be redeemed by submitting a redemption request in good order to Brown Brothers
Harriman & Co. Proceeds from the redemption of Fund shares are credited to the
shareholder's account with Brown Brothers Harriman & Co.
Shares held directly in the name of a shareholder on the books of the
Corporation may be redeemed by submitting a redemption request in good order to
the Corporation through the Funds' Shareholder Servicing Agent (see back cover
for address and phone number). Proceeds resulting from such redemption are paid
by the Corporation directly to the shareholder.
A redemption request in good order must be received by the Corporation
prior to 4:00 P.M., New York time on any day the New York Stock Exchange is open
for regular trading. Such a redemption is executed at the net asset value per
share next determined on that same day. Proceeds of a redemption are paid in
"available funds" generally on the fifth business day after the redemption
request is executed, and in any event within seven days. For purposes of
determining the payment date, a business day is a day on which banks in the
State of New York are open for business.
Redemptions By the Corporation
The Funds' Shareholder Servicing Agent (see page 15) and each Eligible
Institution (see page 15) may establish and amend from time to time for their
respective customers a minimum account size. If the value of a shareholder's
holdings in a Fund falls below that amount because of a redemption of shares,
the shareholder's remaining shares may be redeemed, in which case the redemption
fee would also apply. If such remaining shares are to be redeemed, the
shareholder is so notified and is allowed 60 days to make an additional
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<PAGE>
investment to enable the shareholder to meet the minimum requirement before the
redemption is processed. Brown Brothers Harriman & Co., the Funds' Shareholder
Servicing Agent, has established a minimum account size of $25,000 and Brown
Brothers Harriman & Co., as an Eligible Institution, has established a minimum
account size of $5,000 ($1,000 for eligible individual retirement accounts,
401(k) plans and defined contribution plans).
Further Redemption Information
In the event a shareholder redeems all shares held in a Fund, future
purchases of shares of that Fund by such shareholder would be subject to that
Fund's minimum initial purchase requirements.
The value of shares redeemed may be more or less than the shareholder's
cost depending on Fund performance during the period the shareholder owned such
shares. Redemptions of shares are taxable events on which a shareholder may
realize a gain or a loss.
An investor should be aware that redemptions from a Fund may not be
processed if a completed account application with a certified taxpayer
identification number has not been received.
The Corporation has reserved the right to pay the amount of a redemption
from a Fund, either totally or partially, by a distribution in kind of
securities (instead of cash) from that Fund. See "Net Asset Value; Redemption in
Kind" in the Statement of Additional Information.
A shareholder's right to receive payment with respect to any redemption may
be suspended or the payment of the redemption proceeds postponed for up to seven
days and for such other periods as the 1940 Act may permit. (See "Additional
Information" in the Statement of Additional Information.)
MANAGEMENT OF THE CORPORATION
================================================================================
Directors and Officers
The Directors, in addition to supervising the actions of the Administrator,
Investment Adviser and Distributor of each Fund, as set forth below, decide upon
matters of general policy. Because of the services rendered to the Corporation
by the Investment Adviser and the Administrator, the Corporation itself requires
no employees other than its officers, none of whom, other than the Chairman,
receive compensation from the Funds and all of whom, other than the Chairman,
are employed by 59 Wall Street Administrators. (See "Directors and Officers" in
the Statement of Additional Information.)
The Directors of the Corporation are:
J.V. Shields, Jr.
Chairman and Chief Executive Officer of Shields & Company
Eugene P. Beard
Executive Vice President-Finance and
Operations of The Interpublic Group of Companies
David P. Feldman
Corporate Vice President-Investment Management of AT&T
Alan G. Lowy
Private Investor
Arthur D. Miltenberger
Vice President and Chief Financial Officer
of Richard K. Mellon and Sons
Investment Adviser
The Investment Adviser to each Fund is Brown Brothers Harriman & Co.,
Private Bankers, a New York limited partnership established in 1818. The firm is
subject to examination and regulation by the Superintendent of Banks of the
State of New York and by the Department of Banking of the Commonwealth of
Pennsylvania. The firm is also subject to supervision and examination by the
Commissioner of Banks of the Commonwealth of Massachusetts.
13
<PAGE>
Brown Brothers Harriman & Co. provides investment advice and portfolio
management services to each Fund. Subject to the general supervision of the
Corporation's Directors, Brown Brothers Harriman & Co. makes the day-to-day
investment decisions for each Fund, places the purchase and sale orders for the
portfolio transactions of each Fund, and generally manages each Fund's
investments. Brown Brothers Harriman & Co. provides a broad range of investment
management services for customers in the United States and abroad. At December
31, 1994, it managed total assets of approximately $21 billion.
Mr. John A. Nielsen and Mr. Henry A. Frantzen are the portfolio managers
for the Funds. Mr. Nielsen is the partner responsible for international equity
investment management at Brown Brothers Harriman & Co. Mr. Nielsen holds a B.A.
from Bucknell University, a M.B.A. from Columbia University and is a Chartered
Financial Analyst. He joined Brown Brothers Harriman & Co. in 1968. Mr. Frantzen
is the senior international investment portfolio manager and strategist for
Brown Brothers Harriman & Co. Mr. Frantzen holds a B.S. from the University of
North Dakota. He joined Brown Brothers Harriman & Co. in 1992. Prior to his
employment at Brown Brothers Harriman & Co., Mr. Frantzen worked at Oppenheimer
Management Corporation where he was an Executive Vice President and Director of
Equities.
As compensation for the services rendered and related expenses such as
salaries of advisory personnel borne by Brown Brothers Harriman & Co. under the
Investment Advisory Agreements, Brown Brothers Harriman & Co. receives from each
Fund an annual fee, computed daily and payable monthly, equal to 0.65% of the
average daily net assets of each Fund. Brown Brothers Harriman & Co. also
receives an administration fee and a shareholder servicing/eligible institution
fee from each Fund equal to 0.15% and 0.25%, respectively, of each Fund's
average daily net assets.
The investment advisory services of Brown Brothers Harriman & Co. to each
Fund are not exclusive under the terms of the Investment Advisory Agreements.
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 Corporation and Brown Brothers
Harriman & Co. dated September 5, 1990, as amended as of December 15, 1993, the
Corporation 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 Corporation upon the expiration or earlier termination of any investment
advisory agreement between a Fund or any investment company in which a series of
the Corporation invests all of its assets and Brown Brothers Harriman & Co.
Termination of the agreement would require the Corporation to change its name
and the name of each 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 for the Corporation.
(See "Administrator" in the Statement of Additional Information.)
In its capacity as Administrator, Brown Brothers Harriman & Co. administers
all aspects of the Corporation's operations subject to the supervision of the
Corporation's Directors 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 Corporation 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
14
<PAGE>
Corporation, including the maintenance of certain books and records; (ii)
oversees the performance of administrative and professional services to the
Corporation by others, including the Funds' Custodian, Transfer and Dividend
Disbursing Agent; (iii) provides the Corporation 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 Corporation's
registration statement and each 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 each
Fund and reports to each Fund's shareholders and the Securities and Exchange
Commission.
For the services rendered to the Corporation and related expenses borne by
Brown Brothers Harriman & Co., as Administrator of the Corporation, Brown
Brothers Harriman & Co. receives from each Fund an annual fee, computed daily
and payable monthly, equal to 0.15% of that Fund's average daily net assets.
Pursuant to a Subadministrative Services Agreement with Brown Brothers
Harriman & Co., 59 Wall Street Administrators performs such subadministrative
duties for the Corporation as are from time to time agreed upon by the parties.
The offices of 59 Wall Street Administrators are located at 6 St. James Avenue,
Boston, Massachusetts 02116. 59 Wall Street Administrators is a wholly-owned
subsidiary of Signature Financial Group, Inc. ("SFG"). SFG is not affiliated
with Brown Brothers Harriman & Co. 59 Wall Street Administrators'
subadministrative duties may include providing equipment and clerical personnel
necessary for maintaining the organization of the Corporation, participation in
the preparation of documents required for compliance by the Corporation with
applicable laws and regulations, preparation of certain documents in connection
with meetings of Directors and shareholders of the Corporation, 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 Funds.
Shareholder Servicing Agent
The Corporation has entered into a shareholder servicing agreement with
Brown Brothers Harriman & Co. pursuant to which Brown Brothers Harriman & Co.,
as agent for the Funds, among other things: answers inquiries from shareholders
of and prospective investors in the Funds 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 Funds; assists shareholders of and
prospective investors in the Funds in designating and changing dividend options,
account designations and addresses; and provides such other related services as
the Corporation or a shareholder of or prospective investor in a Fund may
reasonably request. For these services, Brown Brothers Harriman & Co. receives
from each Fund an annual fee, computed daily and payable monthly, equal to 0.25%
of that Fund's average daily net assets 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.
Eligible Institutions
The Corporation has entered into an eligible institution agreement with
Brown Brothers Harriman & Co. pursuant to which Brown Brothers Harriman & Co.,
as agent for the Corporation with respect to shareholders of and prospective
investors in the Funds who have a custody account with Brown Brothers Harriman &
Co., among other things: provides necessary personnel and facilities to
establish and maintain certain shareholder accounts and records enabling it to
hold, as agent, its customers' shares in its name or its nominee name on the
shareholder records of the Corporation; 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 Funds; provides periodic statements showing a customer's account balance
15
<PAGE>
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 Corporation to its customers; and receives, tabulates and transmits to the
Corporation proxies executed by its customers with respect to meetings of
shareholders of the Funds. For these services, Brown Brothers Harriman & Co.
receives from each Fund an annual fee, computed daily and payable monthly, equal
to 0.25% of that Fund's average daily net assets represented by shares owned
during the period for which payment was being made by customers for whom Brown
Brothers Harriman & Co. was the holder or agent of record.
The eligible institution agreement with Brown Brothers Harriman & Co. is
non-exclusive and the Corporation expects from time to time to enter into
similar agreements with other financial institutions. At such time as any such
similar agreement is entered into, references in this Prospectus to shareholders
of and prospective investors in the Funds who have a custody account with Brown
Brothers Harriman & Co. shall include such shareholders of and prospective
investors in the Funds who have an account with the financial institution which
entered into such other agreement, except as expressly stated in this
Prospectus.
Distributor
59 Wall Street Distributors acts as exclusive Distributor of shares of the
Fund. Its office is located at 6 St. James Avenue, Boston, Massachusetts 02116.
59 Wall Street Distributors is a wholly-owned subsidiary of SFG. SFG and its
affiliates currently provide administration and distribution services for other
registered investment companies. The Corporation pays for the preparation,
printing and filing of copies of the Corporation's registration statements and
each Fund's prospectus as required under federal and state securities laws. See
"Distributor" in the Statement of Additional Information.
59 Wall Street Distributors holds itself available to receive purchase
orders for Fund shares.
Custodian, Transfer and
Dividend Disbursing Agent
State Street Bank and Trust Company ("State Street" or the "Custodian"),
225 Franklin Street, P.O. Box 351, Boston, Massachusetts 02110, is Custodian,
Transfer and Dividend Disbursing Agent for each Fund.
As Custodian, it is responsible for maintaining books and records of each
Fund's portfolio transactions and holding each Fund's portfolio securities and
cash pursuant to a custodian agreement with the Corporation. Cash is held for
each Fund in demand deposit accounts at the Custodian. State Street employs
subcustodians, each of which has been approved by the Board of Directors in
accordance with the regulations of the Securities and Exchange Commission, for
the purpose of providing custodial services for foreign assets held outside the
United States for each Fund. The Board of Directors monitors the activities of
the Custodian and each subcustodian. Subject to the supervision of the
Administrator, the Custodian maintains each Fund's accounting and portfolio
transaction records and for each day computes each Fund's net asset value. As
Transfer and Dividend Disbursing Agent it is responsible for maintaining the
books and records detailing the ownership of each Fund's shares.
Independent Auditors
Deloitte & Touche LLP are the independent auditors for the Funds.
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<PAGE>
NET ASSET VALUE
================================================================================
Each Fund's net asset value per share is determined once daily at 4:00
P.M., New York time on each day the New York Stock Exchange is open for regular
trading.
The determination of each Fund's net asset value per share is made by
subtracting from the value of the total assets of a Fund the amount of its
liabilities and dividing the difference by the number of shares of that Fund
outstanding at the time the determination is made.
Values of assets in each Fund's portfolio are determined on the basis of
their market or other fair value. (See "Net Asset Value; Redemption in Kind" in
the Statement of Additional Information.)
DIVIDENDS AND DISTRIBUTIONS
================================================================================
Substantially all of each Fund's net investment income and realized net
short-term capital gains in excess of net long-term capital losses ("Net
Income") is declared and paid to shareholders at least annually as a dividend,
and substantially all of each Fund's realized net long-term capital gains in
excess of net short-term capital losses is declared and paid to shareholders on
an annual basis as a capital gains distribution. An additional dividend and/or
capital gains distribution may be made in a given year to the extent necessary
to avoid the imposition of federal excise tax on a Fund. (See "Taxes" below.)
Dividends and capital gains distributions are payable to shareholders of record
on the record date.
Unless a shareholder otherwise elects, dividends and capital gains
distributions are automatically reinvested in additional Fund shares without
reference to the minimum subsequent purchase requirement. The Corporation
reserves the right to discontinue, alter or limit the automatic reinvestment
privilege at any time, but will provide shareholders prior written notice of any
such discontinuance, alteration or limitation.
A shareholder whose shares are held by Brown Brothers Harriman & Co. on
behalf of the shareholder and who elects to have dividends and capital gains
distributions paid in cash has the amount of such dividends and capital gains
distributions automatically credited to the shareholder's account with Brown
Brothers Harriman & Co. Such a shareholder who elects to have dividends and
capital gains distributions reinvested is able to do so, in both whole and
fractional shares.
A shareholder whose shares are held directly in the shareholder's name on
the books of the Corporation and who elects to have dividends and capital gains
distributions paid in cash receives a check in the amount of such dividends and
capital gains distributions. Such a shareholder who elects to have dividends and
capital gains distributions reinvested is able to do so, in both whole and
fractional shares.
TAXES
================================================================================
Each year, the Corporation intends to continue to qualify each Fund and
elect that each Fund be treated as a separate "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly,
the Funds are not subject to federal income taxes on its Net Income and realized
net long-term capital gains in excess of net short-term capital losses that are
distributed to its shareholders. A 4% non-deductible excise tax is imposed on a
Fund to the extent that certain distribution requirements for that Fund for each
calendar year are not met. The Corporation intends to continue to meet such
requirements.
Dividends are taxable to shareholders of a Fund as ordinary income, whether
such dividends are paid in cash or reinvested in additional shares. Dividends
17
<PAGE>
paid from the Funds are not eligible for the dividends-received deduction
allowed to corporate shareholders because the income of the Funds does not
consist of dividends paid by domestic corporations. Capital gains distributions
are taxable to shareholders as long-term capital gains, whether paid in cash or
reinvested in additional shares and regardless of the length of time a
particular shareholder has held Fund shares.
Any dividend or capital gains distribution has the effect of reducing the
net asset value of Fund shares held by a shareholder by the same amount as the
dividend or capital gains distribution. If the net asset value of the shares
should be reduced below a shareholder's cost as a result of such a dividend or
capital gains distribution, the dividend or capital gains distribution, although
constituting a return of invested capital, would be taxable as described above.
Any gain or loss realized on the redemption of Fund shares by a shareholder who
is not a dealer in securities is treated as long-term capital gain or loss if
the shares have been held for more than one year, and otherwise as short-term
capital gain or loss. However, any loss realized by a shareholder upon the
redemption of shares in a Fund held one year or less is treated as a long-term
capital loss to the extent of any long-term capital gains distributions received
by the shareholder with respect to such shares.
The Funds may be subject to foreign withholding taxes with respect to
income received from sources within foreign countries. So long as more than 50%
in value of a Fund's total assets at the close of any fiscal year consists of
stock or securities of foreign corporations, at the election of the Corporation
any such foreign income taxes paid by a Fund may be treated as paid directly by
its shareholders. The Corporation makes such an election only if it deems it to
be in the best interest of that Fund's shareholders and notifies shareholders in
writing each year if it makes the election and of the amount of foreign income
taxes, if any, to be treated as paid by the shareholders. If the Corporation
makes the election, each Fund shareholder would be required in computing federal
income tax liability to include in income that shareholder's proportionate share
of the amount of foreign income taxes paid by that Fund and would be entitled to
claim either a credit (which is subject to certain limitations), or, if
deductions are itemized, a deduction for that shareholder's share of the foreign
income taxes paid by that Fund. (No deduction is permitted in computing
alternative minimum tax liability.) Certain entities, including Corporations
formed as part of corporate pension or profit-sharing plans and certain
charitable and other organizations described in Section 501 (c) of the Code,
that are generally exempt from federal income taxes may not receive any benefit
from the election by the Corporation to "pass through" foreign income taxes to a
Fund's shareholders.
Under U.S. Treasury regulations, the Corporation and each Eligible
Institution are required to withhold and remit to the U.S. Treasury a portion
(31%) of dividends and capital gains distributions on the accounts of those
shareholders who fail to provide a correct taxpayer identification number
(Social Security Number for individuals) or to make required certifications, or
who have been notified by the Internal Revenue Service that they are subject to
such withholdings. Prospective investors should submit an IRS Form W-9 to avoid
such withholding.
State and Local Taxes
The 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.
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 a Fund
since alternative investments are available which would not be subject to United
States withholding tax.
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Other Information
Annual notification as to the tax status of capital gains distributions, if
any, is provided to shareholders shortly after October 31, the end of each
Fund's fiscal year. Additional tax information is mailed to shareholders in
January.
This tax discussion is based on the tax laws and regulations in effect on
the date of this Prospectus, however such laws and regulations are subject to
change. Shareholders and prospective investors are urged to consult their tax
advisors regarding specific questions relevant to their particular
circumstances.
DESCRIPTION OF SHARES
================================================================================
The Corporation is an open-end management investment company organized on
July 16, 1990, as a corporation under the laws of the State of Maryland. Its
offices are located at 6 St. James Avenue, Boston, Massachusetts 02116; its
telephone number is (617) 423-0800.
The Articles of Incorporation currently permit the Corporation to issue
2,500,000,000 shares of common stock, par value $.001 per share, of which
25,000,000 as shares of the European Equity Fund and 25,000,000 as shares of the
Pacific Basin Equity Fund. The Board of Directors may increase the number of
shares the Corporation is authorized to issue without the approval of
shareholders. The Board of Directors also has the power to designate one or more
series of shares of common stock and to classify and reclassify any unissued
shares with respect to such series. Currently there are four such series in
addition to the Funds.
Each share of the Fund represents an equal proportional interest in the
Fund with each other share. Upon liquidation of the Fund, shareholders are
entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.
Shareholders of each Fund are entitled to a full vote for each full share
held and to a fractional vote for fractional shares. The voting rights of
shareholders are not cumulative. Shares have no preemptive or conversion rights.
The rights of redemption are described elsewhere herein. Shares are fully paid
and nonassessable by the Corporation. It is the intention of the Corporation not
to hold meetings of shareholders annually. The Directors may call meetings of
shareholders for action by shareholder vote as may be required by the 1940 Act
or as may be permitted by the Articles of Incorporation or By-laws. Shareholders
have under certain circumstances (e.g., upon application and submission of
certain specified documents to the Directors by a specified number of
shareholders) the right to communicate with other shareholders in connection
with requesting a meeting of shareholders for the purpose of removing one or
more Directors. Shareholders also have the right to remove one or more Directors
without a meeting by a declaration in writing by a specified number of
shareholders.
The By-laws of the Corporation provide that the presence in person or by
proxy of the holders of record of one third of the shares of a Fund outstanding
and entitled to vote thereat shall constitute a quorum at all meetings of
shareholders of that Fund, 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 Corporation's Articles of Incorporation provide that, at any meeting of
shareholders of a Fund, Brown Brothers Harriman & Co., as an Eligible
Institution, may vote any shares as to which Brown Brothers Harriman & Co. is
the agent of record and which are otherwise not represented in person or by
proxy at the meeting, proportionately in accordance with the votes cast by
holders of all shares otherwise represented at the meeting in person or by proxy
as to which Brown Brothers Harriman & Co. is the agent of record. Any shares so
voted by Brown Brothers Harriman & Co. are deemed represented at the meeting for
purposes of quorum requirements.
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ADDITIONAL INFORMATION
================================================================================
As used in this Prospectus, the term "majority of a Fund's outstanding
voting securities as defined in the 1940 Act" currently means the vote of (i)
67% or more of that Fund's shares present at a meeting, if the holders of more
than 50% of the outstanding voting securities of that Fund are present in person
or represented by proxy; or (ii) more than 50% of that Fund's outstanding voting
securities, whichever is less.
Fund shareholders receive semi-annual reports containing unaudited
financial statements and annual reports containing financial statements audited
by independent auditors.
A confirmation of each purchase and redemption transaction is issued on
execution of that transaction.
Each Fund's performance may be used from time to time in shareholder
reports or other communications to shareholders or prospective investors.
Performance figures are based on historical earnings and are not intended to
indicate future performance. Performance information may include a Fund's
investment results and/or comparisons of its investment results to various
unmanaged indexes (such as the MSCI-Europe and MSCI-Pacific). To the extent that
unmanaged indexes are so included, the same indexes are used on a consistent
basis. A Fund's investment results as used in such communications are calculated
on a total rate of return basis in the manner set forth below. From time to
time, fund rankings from various sources, such as Micropal, may be quoted.
Period and average annualized "total rates of return" may be provided in
such communications. The "total rate of return" refers to the change in the
value of an investment in a Fund over a stated period based on any change in net
asset value per share and including the value of any shares purchasable with any
dividends or capital gains distributions during such period. Period total rates
of return may be annualized. An annualized total rate of return is a compounded
total rate of return which assumes that the period total rate of return is
generated over a one year period, and that all dividends and capital gains
distributions are reinvested. An annualized total rate of return is slightly
higher than a period total rate of return if the period is shorter than one
year, because of the assumed reinvestment.
This Prospectus omits certain of the information contained in the Statement
of Additional Information and the Registration Statement filed with the
Securities and Exchange Commission. The Statement of Additional Information may
be obtained from 59 Wall Street Distributors without charge and the Registration
Statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the Rules and Regulations of the Commission.
20
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APPENDIX--HEDGING STRATEGIES
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Options on Stock Indexes. A stock index fluctuates with changes in the
market values of the stocks included in the index. Examples of stock indexes are
the Standard & Poor's 500 Stock Index (Chicago Board of Options Exchange), the
New York Stock Exchange Composite Index (New York Stock Exchange), The Financial
Times-Stock Exchange 100 (London Traded Options Market), the Nikkei 225 Stock
Average (Osaka Securities Exchange) and Tokyo Stock Price Index (Tokyo Stock
Exchange).
Options on stock indexes are generally similar to options on stock except
that the delivery requirements are different. Instead of giving the right to
take or make delivery of stock at a fixed price ("strike price"), an option on a
stock index gives the holder the right to receive a cash "exercise settlement
amount" equal to (a) the amount, if any, by which the strike price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied by (b)
a fixed "index multiplier". Receipt of this cash amount depends upon the closing
level of the stock index upon which the option is based being greater than, in
the case of a call, or less than, in the case of a put, the price of the option.
The amount of cash received is equal to such difference between the closing
price of the index and the strike price of the option expressed in U.S. dollars
or a foreign currency, as the case may be, times a specified multiple.
The effectiveness of purchasing stock index options as a hedging technique
depends upon the extent to which price movements in the portion of the
securities portfolio of a Fund being hedged correlate with price movements of
the stock index selected. The value of an index option depends upon future
movements in the level of the overall stock market measured by the underlying
index before the expiration of the option. Accordingly, the successful use of
options on stock indexes for a Fund is subject to the Investment Adviser's
ability both to select an appropriate index and to predict future price
movements over the short term in the overall stock market. Brokerage costs are
incurred in the purchase of stock index options and the incorrect choice of an
index or an incorrect assessment of future price movements may result in poorer
overall performance than if a stock index option had not been purchased.
Options on Currencies. A call option on a currency gives the purchaser of
the option the right to buy the underlying currency at a fixed price, either at
any time during the option period (American style) or on the expiration date
(European style). Similarly, a put option gives the purchaser of the option the
right to sell the underlying currency at a fixed price, either at any time
during the option period or on the expiration date. To liquidate a put or call
option position, a "closing sale transaction" may be made for a Fund at any time
prior to the expiration of the option, such a transaction involves selling the
option previously purchased. Options on currencies are traded both on recognized
exchanges (such as the Philadelphia Options Exchange) and over-the-counter.
The value of a currency option purchased for a Fund depends upon future
changes in the value of that currency before the expiration of the option.
Accordingly, the successful use of options on currencies for a Fund is subject
to the Investment Adviser's ability to predict future changes in the value of
currencies over the short term. Brokerage costs are incurred in the purchase of
currency options and an incorrect assessment of future changes in the value of
currencies may result in a poorer overall performance than if such a currency
had not been purchased.
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The 59 Wall Street Fund, Inc.
Investment Adviser and
Administrator
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Distributor
59 Wall Street Distributors, Inc.
6 St. James Avenue
Boston, Massachusetts 02116
Shareholder Servicing Agent
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
(212) 493-8100
No dealer, salesman or any other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus and the Statement of Additional Information, in connection with the
offer contained in this Prospectus, and if given or made, such other information
or representations must not be relied upon as having been authorized by the
Corporation or the Distributor. This Prospectus does not constitute an offer by
the Corporation or by the Distributor to sell or the solicitation of an offer to
buy any of the securities offered hereby in any jurisdiction to any person to
whom it is unlawful for the Corporation or the Distributor to make such offer in
such jurisdiction.
European Equity Fund
Pacific Basin Equity Fund
PROSPECTUS
March 1, 1995
