As filed with the Securities and Exchange Commission on August 20, 1997
Registration No. 33-48605 and 811-06139
(The 59 Wall Street Mid-Cap Fund)
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 10
and/or
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 30
THE 59 WALL STREET FUND, INC.
(Exact name of Registrant as specified in charter)
6 St. James Avenue, Boston, Massachusetts 02116
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (617)423-0800
PHILIP W. COOLIDGE Copy to: JOHN E. BAUMGARDNER, JR., ESQ.
6 St. James Avenue Sullivan & Cromwell
Boston, Massachusetts 02116 125 Broad Street
Name and Address of Agent for Service) New York, New York 10004
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a) (i)
[ ] on (date) pursuant to paragraph (a)(i)
[X] 75 days after filing 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.
The U.S. Mid-Cap Portfolio has also executed this Registration Statement.
Registrant has registered an indefinite number of its shares of common stock
pursuant to Rule 24f-2 under the Investment Company Act of 1940. Registrant
filed the Notice required by Rule 24f-2 on December 27, 1996, for Registrant's
fiscal year ended October 31, 1996.
===============================================================================
<PAGE>
EXPLANATORY NOTE
This Amendment (the "Amendment") to the Registrant's Registration
Statement relates to the Prospectus of The 59 Wall Street Mid-Cap Fund, a series
of shares of the Registrant. This Amendment is being filed in order to file
disclosure documents pertaining to The 59 Wall Street Mid-Cap Fund, a new series
of the Corporation.
Three other series of shares of the Registrant, The 59 Wall Street
Small Company Fund, The 59 Wall Street European Equity Fund and The 59 Wall
Street Pacific Basin Equity Fund, are offered by the combined Prospectus that
is included in Part A of Amendment No. 27 to the Registrant's Registration
Statement.
Two other series of shares of the Registrant, The 59 Wall Street U.S.
Equity Fund and The 59 Wall Street Inflation-Indexed Securities Fund are
offered by the Prospectus that is included in Part A of Amendment No. 28 to the
Registrant's Registration Statement.
Two other series of shares of the Registrant, The 59 Wall Street
International Equity Fund and The 59 Wall Street Emerging Markets Fund are
offered by the Prospectus that is included in Part A of Amendment No. 29 to the
Registrant's Registration Statement.
This Amendment does not relate to, amend or otherwise affect the
above-referenced Prospectuses, which are incorporated herein by reference.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-1A Item No. Location
Part A
Item 1. Cover Page . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . Expense Table
Item 3. Condensed Financial Information. . . . . . Not Applicable
Item 4. General Description of Registrant. . . . . Investment Objective
and Restrictions;
Description of Shares
Item 5. Management of the Fund . . . . . . . . . . Management of the
Corporation and the
Portfolio; Expense
Table
Item 5A. Management's Description of Fund
Performance . . . . . . . . . . . . . . Not Applicable
Item 6. Capital Stock and Other Securities . . . . Description of Shares
Item 7. Purchase of Securities Being Offered . . . Management of the
Corporation and the
Portfolio;
Item 8. Redemption or Repurchase . . . . . . . . . Redemption of Shares
Item 9. Pending Legal Proceedings. ... . . . . . . Not Applicable
Part B
Item 10. Cover Page . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents. . . . . . . . . . . . . Table of Contents
Item 12. General Information and History. . . . . . Not Applicable
Item 13. Investment Objectives and Policies . . . . Investment Objective and
Policies; Investment
Restrictions
Item 14. Management of the Fund . . . . . . . . . . Directors, Trustees and
Officers
Item 15. Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . Directors, Trustees and
Officers
Item 16. Investment Advisory and Other Services . . Administrator;
Distributor;
Investment Adviser;
Item 17. Brokerage Allocation and Other Practices . Portfolio Transactions
Item 18. Capital Stock and Other Securities . . . . Description of Shares
(in both the Prospectus
and the Statement of
Additional Information
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered. . . . . . . . Purchase of Shares; Net
Asset Value;
Redemption in Kind
Item 20. Tax Status . . . . . . . . . . . . . . . . Federal Taxes
Item 21. Underwriters . . . . . . . . . . . . . . . Administrator;
Distributor; Purchase
of Shares
Item 22. Calculation of Performance Data . . . . . Computation of
Performance
Item 23. Financial Statements . . . . . . . . . . . Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
WS5520D
PROSPECTUS
THE 59 WALL STREET MID-CAP FUND
6 St. James Avenue, Boston, Massachusetts 02116
The 59 Wall Street Mid-Cap Fund is an open-end investment company which is
a separate diversified portfolio of The 59 Wall Street Fund, Inc. Shares of the
Fund are offered by this Prospectus.
The Fund is designed to enable investors to participate in the
opportunities available in the middle capitalization segment of the U.S. equity
market. The investment objective of the Fund is to provide investors with
long-term maximization of total return, primarily through capital appreciation
from investments in equity securities of middle-sized companies. There can be no
assurance that the Fund's investment objective will be achieved.
Investments in the Fund are neither insured nor guaranteed by the U.S.
Government. Shares of the Fund are not deposits or obligations of, or guaranteed
by, Brown Brothers Harriman & Co., and the shares are not insured by the Federal
Deposit Insurance Corporation or any other federal, state or other governmental
agency.
The Corporation seeks to achieve the investment objective of the Fund by
investing all of the Fund's assets in the U.S. Mid-Cap Portfolio, a diversified
open-end investment company having the same investment objective as the Fund.
Brown Brothers Harriman & Co. is the investment adviser to the Portfolio
and the administrator and shareholder servicing agent of the Fund. Shares of the
Fund are offered at net asset value without a sales charge.
This Prospectus, which investors are advised to read and retain for future
reference, sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. Additional information
about the Fund has been filed with the Securities and Exchange Commission in a
Statement of Additional Information, dated , 1997. This information is
incorporated herein by reference and is available without charge upon request
from the Fund's distributor, 59 Wall Street Distributors, Inc., 6 St. James
Avenue, Boston, Massachusetts 02116.
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 , 1997.
<PAGE>
TABLE OF CONTENTS
PAGE
Expense Table............................................................ 3
Investment Objective and Policies........................................ 4
Investment Restrictions.................................................. 8
Purchase of Shares....................................................... 9
Redemption of Shares..................................................... 10
Management of the Corporation and the Portfolio .......................... 12
Net Asset Value.......................................................... 18
Dividends and Distributions.............................................. 19
Taxes ................................................................... 19
Description of Shares ................................................... 21
Additional Information................................................... 23
Appendix................................................................. 25
TERMS USED IN THIS PROSPECTUS
Corporation ........................ The 59 Wall Street Fund, Inc.
Fund................................ The 59 Wall Street Mid-Cap Fund
Portfolio .......................... U.S. Mid-Cap Portfolio
Investment Adviser.................. Brown Brothers Harriman & Co.
Administrator of the
Corporation.................... Brown Brothers Harriman & Co.
Administrator of the
Portfolio...................... Brown Brothers Harriman Trust Company
(Cayman) Limited
Subadministrator of the
Corporation ................... 59 Wall Street Administrators, Inc.
("59 Wall Street Administrators")
Subadministrator of the
Portfolio...................... Signature Financial Group (Cayman)
Limited ("SFG-Cayman")
Distributor ........................ 59 Wall Street Distributors, Inc.
("59 Wall Street Distributors")
1940 Act............................ The Investment Company Act of 1940,
as amended
2
<PAGE>
EXPENSE TABLE
The following table provides (i) a summary of estimated expenses relating
to purchases and sales of shares of the Fund, and the aggregate annual operating
expenses of the Fund and the Portfolio, as a percentage of average net assets of
the Fund, and (ii) an example illustrating the dollar cost of such estimated
expenses on a $1,000 investment in the Fund. THE DIRECTORS OF THE CORPORATION
BELIEVE THAT THE AGGREGATE PER SHARE EXPENSES OF THE FUND AND THE PORTFOLIO WILL
BE LESS THAN OR APPROXIMATELY EQUAL TO THE EXPENSES WHICH THE FUND WOULD INCUR
IF THE CORPORATION RETAINED THE SERVICES OF AN INVESTMENT ADVISER ON BEHALF OF
THE FUND AND THE ASSETS OF THE FUND WERE INVESTED DIRECTLY IN THE TYPE OF
SECURITIES BEING HELD BY THE PORTFOLIO.
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases.................................. None
Sales Load Imposed on Reinvested Dividends....................... None
Deferred Sales Load.............................................. None
Redemption Fee................................................... None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Investment Advisory Fee............................. 0.65%
12b-1 Fee........................................... None
Other Expenses
Administration Fee ............................... 0.16%
Shareholder Servicing/Eligible Institution Fee.... 0.25%
Other Expenses.................................... 0.19% 0.60
---- ----
Total Fund Operating Expenses....................... 1.25%
----
----
EXAMPLE 1 YEAR 3 YEARS
- ------- ------ -------
A shareholder of the Fund would
pay the following expenses on a $1,000
investment, assuming (1) 5% annual return,
and (2) redemption at the
end of each time period: .......... $ $
----- -----
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. In connection
with the Example, please note that $1,000 is currently less than the Fund's
minimum purchase requirement. "Other Expenses" have been estimated for the
current fiscal year. The purpose of this table is to assist investors in
understanding the various costs and expenses that shareholders of the Fund bear
directly or indirectly.
3
<PAGE>
For more information with respect to the expenses of the Fund and the
Portfolio, see "Management of the Corporation and the Portfolio" herein.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund and the Portfolio is to provide
investors with long-term maximization of total return, primarily through capital
appreciation from investments in equity securities of middle-sized companies.
The investment objective of the Fund and the Portfolio is a fundamental
policy and may be changed only with the approval of the holders of a "majority
of the outstanding voting securities" (as defined in the 1940 Act) of the Fund
or the Portfolio, as the case may be. (See "Additional Information" in this
Prospectus.) However, the investment policies as described below which are the
same for the Fund and the Portfolio are not fundamental and may be changed
without such approval.
The assets of the Portfolio under normal circumstances are fully invested
in equity securities of mid-sized companies, consisting primarily of common
stocks listed on securities exchanges or traded in the over-the-counter market
in the United States. Although the assets of the Portfolio are invested
primarily in common stocks, other securities with equity characteristics may be
purchased, including securities convertible into common stock, trust or limited
partnership interests, rights and warrants.
The Portfolio currently focuses on the approximately 1,200 companies
which have a stock market capitalization between $800 million and $10 billion.
The common stocks of these companies represent one-third of the market value of
U.S. equities and have a total market value of about $3.0 trillion. This segment
of the market was finally given formal recognition in the summer of 1991 when
Standard & Poor's introduced the S&P Mid Cap 400 index. The investment community
has grown increasingly fond of this asset class ever since.
MARKET CAPITALIZATION BREAKDOWN OF THE U.S. EQUITY MARKET
(as of June 30, 1997)
Market Cap. % of Total
SIZE # OF STOCKS (IN BILLIONS) MARKET CAP.
Large (over $10 billion) 169 $5,298 56.3%
Mid ($800 mm to $10 billion) 1,210 $3,080 32.7%
Small (less than $800 mm) 7,341 $1,038 11.0%
TOTALS 8,720 $9,416 100.0%
The Fund uses a bottom-up fundamental investment approach which
concentrates on high-quality issues, supplemented by a technical overlay to
achieve incremental returns above those of the S&P Mid Cap 400 index. Two
proprietary models (one growth-based and the other value-oriented) are used to
4
<PAGE>
build a portfolio of roughly 100 stocks. These models, which were developed by
Brown Brothers Harriman & Co. and backtested extensively, provide the Fund with
a very disciplined and consistent stock selection process. The Growth model
emphasizes earnings growth and expanding profitability while the Value model
highlights stocks with low relative valuations that are exhibiting visible signs
of operational improvement. Although the Fund is run with a growth bias, the
portfolio effectively avoids the volatility of any single style by always
maintaining some value exposure. All stocks from both models are ranked into
deciles based on composite scores, with only the top two deciles of either model
representing the purchase candidates. Purchase candidates are then subjected to
inspection from a technical perspective which emphasizes three key variables:
momentum, money flows and volume patterns. Stocks are sold either when a
deterioration in their fundamental ranking occurs and/or when they appear
vulnerable from a technical perspective.
RISK FACTORS
Investing in equity securities of middle-sized companies involves risks
not typically associated with investing in comparable securities of large
companies. Assets of the Portfolio are invested in companies which may have
narrow product lines and limited financial and managerial resources. Since the
market for mid cap equities is often characterized by less liquidity than that
for large cap equities, the Portfolio's investments can experience unexpected
sharp declines in their market prices. Therefore, shares of the Fund may be
subject to greater declines in value than shares of equity funds investing in
the equity securities of larger companies.
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 indexes may be purchased
and futures contracts on stock indexes may be entered into for the Portfolio
(See Appendix on page for more detail.)
PORTFOLIO BROKERAGE
Utilization of the Investment Adviser's proprietary quantitative models
for the selection of portfolio securities, and the resulting periodic
rebalancing of portfolio holdings, may cause turnover in the Portfolio which is
relatively high compared to more traditionally managed portfolios. 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 portfolio securities (excluding
short-term obligations) were replaced once in a period of one year. For the
fiscal year ending October 31, 1997 the portfolio turnover rate of the Portfolio
is expected to be %. The amount of brokerage commissions and taxes on realized
capital gains to be borne by the shareholders of the Fund tend to increase as
the level of portfolio activity increases.
5
<PAGE>
In effecting securities transactions 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 responsibility; the research and other
investment information provided by the broker; and the commissions charged.
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.
The Investment Adviser may direct a portion of the Portfolio's
securities transactions to certain unaffiliated brokers which in turn use a
portion of the commissions they receive from the Portfolio to pay other
unaffiliated service providers on behalf of the Portfolio for services provided
for which the Portfolio would otherwise be obligated to pay. Such commissions
paid by the Portfolio are at the same rate paid to other brokers for effecting
similar transactions in listed equity securities. Brown Brothers Harriman & Co.
acts as one of the principal brokers of the Portfolio in the purchase and sale
of portfolio securities when, in the judgment of the Investment Adviser, that
firm will be able to obtain a price and execution at least as favorable as other
qualified brokers. As one of the principal brokers for the Portfolio, Brown
Brothers Harriman & Co. receives brokerage commissions from the Portfolio.
On those occasions when Brown Brothers Harriman & Co. deems the
purchase or sale of a security to be in the best interests of the Portfolio as
well as other customers, Brown Brothers Harriman & Co., to the extent permitted
by applicable laws and regulations, may, but is not obligated to, aggregate the
securities to be sold or purchased for the Portfolio with those to be sold or
purchased for other customers in order to obtain best execution, including lower
brokerage commissions, if appropriate. In such event, allocation of the
securities so purchased or sold as well as any expenses incurred in the
transaction are made by Brown Brothers Harriman & Co. in the manner it considers
to be most equitable and consistent with its fiduciary obligations to its
customers, including the Portfolio. In some instances, this procedure might
adversely affect the Portfolio.
OTHER INVESTMENT TECHNIQUES
SHORT-TERM INSTRUMENTS. The assets of the Portfolio may be invested in
U.S. dollar denominated short-term instruments, including repurchase agreements,
obligations of the U.S. Government, its agencies or instrumentalities,
commercial paper and bank obligations (such as certificates of deposit, fixed
time deposits, and bankers' acceptances). Cash is held for the Portfolio in
demand deposit accounts with the Portfolio's custodian bank.
U.S. GOVERNMENT SECURITIES. The assets of the Portfolio may be invested
in securities issued by the U.S. Government, its agencies or instrumentalities.
These securities include notes and bonds issued by the U.S. Treasury, zero
coupon bonds and stripped principal and interest securities.
6
<PAGE>
RESTRICTED SECURITIES. Securities that have legal or contractual
restrictions on their resale may be acquired for the Portfolio. 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 reflects any limitation on their liquidity. (See
"Investment Restrictions".)
LOANS OF PORTFOLIO SECURITIES. Loans of portfolio securities up to 30%
of the total value of the Portfolio are permitted. These loans must be secured
continuously by cash or equivalent collateral or by an irrevocable letter of
credit in favor of the Portfolio at least equal at all times to 100% of the
market value of the securities loaned plus accrued income. By lending
securities, the Portfolio's income can be increased by its continuing to receive
income on the loaned securities as well as by the opportunity 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
the Portfolio and its investors.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Securities may be
purchased for the Portfolio on a when-issued or delayed delivery basis. For
example, delivery and payment may take place a month or more after the date of
the transaction. The purchase price and the interest rate payable on the
securities, if any, are fixed on the transaction date. The securities so
purchased are subject to market fluctuation and no income accrues to the
Portfolio until delivery and payment take place. At the time the commitment to
purchase securities on a when-issued or delayed delivery basis is made, the
transaction is recorded and thereafter the value of such securities is reflected
each day in determining the Portfolio's net asset value. At the time of its
acquisition, a when-issued 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, the Portfolio 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 the Portfolio may not be entered into if such
commitments exceed in the aggregate 15% of the market value of its total assets,
less liabilities other than the obligations created by when-issued or delayed
delivery commitments.
HISTORICAL PERFORMANCE INFORMATION. As permitted by applicable
interpretations by the staff of the Securities and Exchange Commission (the
"SEC"), historical performance information for the Fund for any period or
portion thereof prior to , 1997, the commencement of operations of the Fund, is
that of the Portfolio as adjusted to reflect Fund expenses.
The Portfolio commenced operations on , 1997 after the transfer to it
of all of the assets of Systematic Mid-Cap Fund (the "Non-U.S. Fund") in
exchange for an interest in the Portfolio. The Non-U.S. Fund has the same or
compatible investment objective, policies and restrictions as the
7
<PAGE>
Portfolio and the assets of the Portfolio on , 1997 were the same as the assets
of the Non-U.S. Fund immediately prior to the transfer. While the Non-U.S. Fund
continues to exist, its assets consist solely of its interest in the Portfolio.
The Non-U.S. Fund is not a registered investment company since it is exempt from
registration under the 1940 Act. As permitted by applicable interpretations by
the SEC staff, since in a practical sense the Non-U.S. Fund constitutes the
"predecessor" of the Portfolio, the performance of the Portfolio is calculated
for periods or portions thereof commencing prior to the transfer of the assets
of the Non-U.S. Fund to the Portfolio by including the total return of the
Non-U.S. Fund, with appropriate adjustments.
As a result, the quoted performance data for the Fund includes the
performance of the Non-U.S. Fund for periods before the Registration Statement
for the Fund became effective. As noted above, the Non-U.S. Fund was not
registered under the 1940 Act and thus was not subject to certain investment
restrictions that are imposed by the 1940 Act. If the Non-U.S. Fund had been
registered under the 1940 Act, the performance of the Non-U.S. Fund might have
been adversely affected.
Below is the historical return information for the Fund as of the date
of this prospectus:
Average annual total return: 1 year %
-----
5 years %
-----
* %
Aggregate total return: 1 year %
-----
5 years %
-----
* %
* From , the commencement of operations of the Non-U.S. Fund, to
period end.
INVESTMENT RESTRICTIONS
The Statement of Additional Information for the Fund includes a listing
of the specific investment restrictions which govern the investment policies of
the Fund and the Portfolio. Certain of these investment restrictions are deemed
fundamental policies and may be changed only with the approval of the holders of
a "majority of the outstanding voting securities" (as defined in the 1940 Act)
of the Fund or the Portfolio, as the case may be (see "Additional Information"
in this Prospectus). For instance, excluding the investment of all of the Fund's
assets in an open-end investment company with substantially the same investment
objective, policies and restrictions as the Fund, not more than 10% of the net
assets of the Fund or the Portfolio, as the case may be, may be invested in
securities that are subject to legal or contractual restrictions on resale.
8
<PAGE>
In addition, money is not borrowed by the Portfolio in an amount in
excess of 33 1/3% of its assets. It is intended that money will be borrowed only
from banks and only either to accommodate requests for the withdrawal of part or
all of an interest while effecting an orderly liquidation of portfolio
securities or to maintain liquidity in the event of an unanticipated failure to
complete a portfolio security transaction or other similar situations.
Securities are not purchased for the Portfolio at any time at which the amount
of its borrowings exceed 5% of its assets.
Since the investment restrictions of the Fund correspond directly to
those of the Portfolio, the following is a discussion of the various investment
restrictions of the Portfolio.
As a non-fundamental policy, at least 65% of the value of the total
assets of the Portfolio is invested in the equity securities of companies with a
market capitalization of less than $6 billion and more than $800 million. For
these purposes, equity securities are defined as common stock, securities
convertible into common stock, trust or limited partnership interests, rights
and warrants.
In accordance with applicable regulations, the Portfolio does not
invest more than 10% of its net assets (taken at the greater of cost or market
value) in restricted securities or invest more than 15% of its net assets in
over-the-counter options, time deposits with a maturity of more than seven days,
repurchase agreements maturing in more than seven days and other securities that
are illiquid or otherwise not readily marketable.
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 or instrumentalities; and other securities
limited in respect of any one company to an amount no greater than 5% of the
Fund's total assets and not more than 10% of the outstanding voting securities
of such company.
PURCHASE OF SHARES
Shares of the Fund are offered on a continuous basis at their net asset
value without a sales charge. The Corporation reserves the right to determine
the purchase orders for Fund shares that it will accept. Shares of the Fund may
be purchased on any day the New York Stock Exchange is open for regular trading
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.
Shares are entitled to dividends, declared, if any, starting as of the first
business day following the day a purchase order is executed on the books of the
Corporation.
An investor who has an account with an Eligible Institution (see page
14) or a Financial Intermediary (see page 14) may place purchase orders for Fund
shares with the Corporation through that Eligible Institution or Financial
9
<PAGE>
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. Each
Eligible Institution or Financial Intermediary arranges payment for Fund shares
on behalf of its customers. A transaction fee may be charged by an Eligible
Institution or a Financial Intermediary on the purchase of Fund shares.
An investor who does not have an account with an Eligible Institution
or a Financial Intermediary must place purchase orders for Fund shares with the
Corporation through the Fund's Shareholder Servicing Agent. Such an investor has
such shares held directly in the investor's name on the books of the 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, a check certified by a U.S. bank or a wire
transfer. Brown Brothers Harriman & Co., as the Fund's Shareholder Servicing
Agent, has established a minimum initial purchase requirement for the Fund of
$100,000 and a minimum subsequent purchase requirement for the Fund of $25,000.
These minimum purchase requirements may be amended from time to time.
Inquiries regarding the manner in which purchases of Fund shares may be
effected and other matters pertaining to the Fund should be directed to Brown
Brothers Harriman & Co., the Fund's Shareholder Servicing Agent. (See back cover
for address and phone number.)
REDEMPTION OF SHARES
A redemption request 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. Shares continue to earn dividends declared, if any,
through the business day a redemption request is executed on the books of the
Corporation.
Shares held by an Eligible Institution or a Financial Intermediary on
behalf of a shareholder must be redeemed through that Eligible Institution or
Financial Intermediary pursuant to arrangements made between that shareholder
and that Eligible Institution or Financial Intermediary. Proceeds of a
redemption are paid to that shareholder's account at that Eligible Institution
or Financial Intermediary. A transaction fee may be charged by an Eligible
Institution or a Financial Intermediary on the redemption of Fund shares.
Shares held directly in the name of a shareholder on the books of the
Corporation may be redeemed by submitting a redemption request in good order to
the Corporation through the Fund's Shareholder Servicing Agent. (See back cover
for address and phone number.) Proceeds resulting from such redemption are paid
10
<PAGE>
by the Corporation directly to the shareholder in "available" funds generally on
the next business day after the redemption request is executed, and in any event
within seven days.
REDEMPTIONS BY THE CORPORATION
The Fund's Shareholder Servicing Agent (see page 14), each Eligible
Institution and each Financial Intermediary (see page 14) may establish and
amend from time to time for their respective customers a minimum account size.
If the value of a shareholder's holdings in the Fund falls below that amount
because of a redemption of shares, the shareholder's remaining shares may be
redeemed. If such remaining shares are to be redeemed, the shareholder is so
notified and is allowed 60 days to make an additional investment to enable the
shareholder to meet the minimum requirement before the redemption is processed.
Brown Brothers Harriman & Co., as the Fund's Shareholder Servicing Agent, has
established a minimum account size of $25,000.
FURTHER REDEMPTION INFORMATION
In the event a shareholder redeems all shares held in the Fund, future
purchases of shares of the Fund by such shareholder would be subject to the
Fund's minimum initial purchase requirements.
The value of shares redeemed may be more or less than the shareholder's
cost depending on Fund performance during the period the shareholder owned such
shares. Redemptions of shares are taxable events on which a shareholder may
realize a gain or a loss.
An investor should be aware that redemptions from the Fund may not be
processed if a completed account application with a certified taxpayer
identification number has not been received.
The Corporation has reserved the right to pay the amount of a
redemption from the Fund, either totally or partially, by a distribution in kind
of securities (instead of cash) from the 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.)
11
<PAGE>
MANAGEMENT OF THE CORPORATION AND THE PORTFOLIO
DIRECTORS, TRUSTEES AND OFFICERS
The Corporation's Directors, in addition to supervising the actions of the
Administrator of the Corporation and Distributor, as set forth below, decide
upon matters of general policy with respect to the Corporation. The Portfolio's
Trustees, in addition to supervising the actions of the Portfolio's Investment
Adviser and Administrator, as set forth below, decide upon matters of general
policy with respect to the Portfolio. The Corporation's Directors are not the
same individuals as the Portfolio's Trustees.
Because of the services rendered to the Portfolio by the Investment
Adviser and to the Corporation and the Portfolio by their respective
Administrators, the Corporation and the Portfolio require no employees, and
their respective officers, other than the Chairman, receive no compensation from
the Fund or the Portfolio. (See "Directors, Trustees 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
Vice Chairman-Finance and Operations of
The Interpublic Group of Companies
David P. Feldman
Chairman and Chief Executive Officer-AT&T
Investment Management Corporation
Alan G. Lowy
Private Investor
Arthur D. Miltenberger
Vice President and Chief Financial Officer of
Richard K. Mellon and Sons
The Trustees of the Portfolio are:
H.B. Alvord
Retired, Former Treasurer and Tax Collector
of Los Angeles County
Richard L. Carpenter
Retired, Director of Internal Investments of
the Public School Employees' Retirement
System
12
<PAGE>
Clifford A. Clark
Retired, Former Senior Manager of Brown
Brothers Harriman & Co.
David M. Seitzman
Practicing Physician with Seitzman, Shuman,
Kwart and Phillips
INVESTMENT ADVISER
The Investment Adviser to the Portfolio is Brown Brothers Harriman &
Co., Private Bankers, a New York limited partnership established in 1818. The
firm is subject to examination and regulation by the Superintendent of Banks of
the State of New York and by the Department of Banking of the Commonwealth of
Pennsylvania. The firm is also subject to supervision and examination by the
Commissioner of Banks of the Commonwealth of Massachusetts.
Brown Brothers Harriman & Co. provides investment advice and portfolio
management services to the Portfolio. Subject to the general supervision of the
Portfolio's Trustees, Brown Brothers Harriman & Co. makes the day-to-day
investment decisions, places the purchase and sale orders for portfolio
transactions, and generally manages the Portfolio's investments. Brown Brothers
Harriman & Co. provides a broad range of investment management services for
customers in the United States and abroad. At June 30, 199 , it managed total
assets of approximately $ billion.
The Portfolio is managed on a day-to-day basis by a team of
individuals, including Mr. Donald B. Murphy, Mr. John A. Nielsen and Mr. William
M. Buchanan. Mr. Murphy and Mr. Nielsen are the partners responsible for
quantitative investment management at Brown Brothers Harriman & Co. Mr. Murphy
holds a B.A. from Yale University and an M.B.A. from Columbia University. He
joined Brown Brothers Harriman & Co. in 1966. Mr. Nielsen holds a B.A. from
Bucknell University, an M.B.A. from Columbia University and is a Chartered
Financial Analyst. He joined Brown Brothers Harriman & Co. in 1968. Mr. Buchanan
holds a B.A. from Duke University, an M.B.A. from New York University and is a
Chartered Financial Analyst. He joined Brown Brothers Harriman & Co. in 1991.
As compensation for the services rendered and related expenses such as
salaries of advisory personnel borne by Brown Brothers Harriman & Co. under the
Investment Advisory Agreement, Brown Brothers Harriman & Co. receives from the
Portfolio an annual fee, computed daily and payable monthly, equal to 0.65% of
the average daily net assets of the Portfolio. Brown Brothers Harriman & Co. and
its affiliates also receive annual administration fees from the Fund and the
Portfolio equal to 0.16% of the average daily net assets of the Fund or the
Portfolio, as the case may be. Brown Brothers Harriman & Co. and its affiliates
also receive an annual shareholder servicing/eligible institution fee from the
Fund equal to 0.25% of the average daily net assets of the Fund represented by
shares owned by customers during the period for whom Brown Brothers Harriman &
Co. is the holder or agent of record.
13
<PAGE>
The investment advisory services of Brown Brothers Harriman & Co. to
the Portfolio are not exclusive under the terms of the Investment Advisory
Agreement. Brown Brothers Harriman & Co. is free to and does render investment
advisory services to others, including other registered investment companies.
Pursuant to 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 use in its name "59 Wall Street", a service mark 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
Brown Brothers Harriman & Co. and the Corporation or any investment company in
which a series of the Corporation invests all of its assets. Termination of the
agreement would require the Corporation 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, and amended
August 19, 1997, each Licensee may continue to use in its name "59 Wall Street"
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".
ADMINISTRATORS
Brown Brothers Harriman & Co. acts as Administrator of the Corporation
and Brown Brothers Harriman Trust Company (Cayman) Limited acts as Administrator
of the Portfolio. (See "Administrators" in the Statement of Additional
Information.) Brown Brothers Harriman Trust Company (Cayman) Limited is a
wholly-owned subsidiary of Brown Brothers Harriman Trust Company of New York,
which is a wholly-owned subsidiary of Brown Brothers Harriman & Co.
In its capacity as Administrator of the Corporation, 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 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 Fund's
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 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 Fund and reports to shareholders and the Securities and
Exchange Commission.
14
<PAGE>
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 the Fund an annual fee, computed daily and
payable monthly, equal to 0.125% of the Fund's average daily net assets.
Brown Brothers Harriman Trust Company (Cayman) Limited, in its capacity
as Administrator of the Portfolio, administers all aspects of the Portfolio's
operations subject to the supervision of the Portfolio's Trustees except as set
forth above under "Investment Adviser". In connection with its responsibilities
as Administrator for the Portfolio and at its own expense, Brown Brothers
Harriman Trust Company (Cayman) Limited (i) provides the Portfolio with the
services of persons competent to perform such supervisory, administrative and
clerical functions as are necessary in order to provide effective administration
of the Portfolio, including the maintenance of certain books and records,
receiving and processing requests for increases and decreases in the beneficial
interests in the Portfolio, notification to the Investment Adviser of available
funds for investment, reconciliation of account information and balances between
the Custodian and the Investment Adviser, and processing, investigating and
responding to investor inquiries; (ii) oversees the performance of
administrative and professional services to the Portfolio by others, including
the Custodian; (iii) provides the Portfolio with adequate office space and
communications and other facilities; and (iv) prepares and/or arranges for the
preparation, but does not pay for, the periodic updating of the Portfolio's
registration statement for filing with the Securities and Exchange Commission,
and the preparation of tax returns for the Portfolio and reports to investors
and the Securities and Exchange Commission.
For the services rendered to the Portfolio and related expenses borne
by Brown Brothers Harriman Trust Company (Cayman) Limited as Administrator of
the Portfolio, Brown Brothers Harriman Trust Company (Cayman) Limited receives
from the Portfolio an annual fee, computed daily and payable monthly, equal to
0.035% of the Portfolio'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 Fund.
Pursuant to a Subadministrative Services Agreement with Brown Brothers
Harriman Trust Company (Cayman) Limited, SFG-Cayman performs such
15
<PAGE>
subadministrative duties for the Portfolio as are from time to time agreed upon
by the parties. The offices of SFG-Cayman are located at Elizabethan Square,
George Town, Grand Cayman BWI. SFG-Cayman is a wholly-owned subsidiary of SFG.
SFG-Cayman's subadministrative duties may include providing equipment and
clerical personnel necessary for maintaining the organization of the Portfolio,
participation in the preparation of documents required for compliance by the
Portfolio with applicable laws and regulations, preparation of certain documents
in connection with meetings of Trustees of and investors in the Portfolio, and
other functions that would otherwise be performed by the Administrator of the
Portfolio as set forth above. For performing such subadministrative services,
SFG-Cayman receives such compensation as is from time to time agreed upon, but
not in excess of the amount paid to the Administrator from the Portfolio.
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 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 Corporation 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 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 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
16
<PAGE>
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 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 Corporation enters into eligible institution agreements with banks,
brokers and other financial institutions pursuant to which each financial
institution, as agent for the Corporation with respect to shareholders of and
prospective investors in the Fund who are customers with 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 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 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 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 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 each
financial institution was the holder or agent of record.
EXPENSE PAYMENT AGREEMENT
Under an agreement dated August 22, 1995, Brown Brothers Harriman Trust
Company (Cayman) Limited pays the expenses of the Portfolio, 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 Portfolio. In
return, Brown Brothers Harriman Trust Company (Cayman) Limited receives a fee
from the Portfolio such that after such payment the aggregate expenses of the
Portfolio do not exceed an agreed upon annual rate, currently 0.90% of the
average daily net assets of the Portfolio. Such fees are computed daily and paid
monthly.
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
17
<PAGE>
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 statement and
the Fund's prospectus as required under federal and state securities laws. (See
"Distributor" in the Statement of Additional Information.)
59 Wall Street Distributors holds itself available to receive purchase
orders for Fund shares.
CUSTODIAN, TRANSFER AND
DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company ("State Street" or the
"Custodian"), 225 Franklin Street, P.O. Box 351, Boston, Massachusetts 02110, is
Custodian for the Fund and the Portfolio and Transfer and Dividend Disbursing
Agent for the Fund.
As Custodian for the Fund, it is responsible for holding the Fund's
assets (i.e., cash and the Fund's interest in the Portfolio) pursuant to a
custodian agreement with the Corporation. Cash is held for the Fund in demand
deposit accounts at the Custodian. Subject to the supervision of the
Administrator of the Corporation, the Custodian maintains the accounting records
for the Fund and each day computes the net asset value per share of the Fund. As
Transfer and Dividend Disbursing Agent it is responsible for maintaining the
books and records detailing the ownership of the Fund's shares.
As Custodian for the Portfolio, it is responsible for maintaining books
and records of portfolio transactions and holding the Portfolio's securities and
cash pursuant to a custodian agreement with the Portfolio. Cash is held for the
Portfolio in demand deposit accounts at the Custodian. Subject to the
supervision of the Administrator of the Portfolio, the Custodian maintains the
accounting and portfolio transaction records for the Portfolio and each day
computes the net asset value and net income of the Portfolio.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, Boston, Massachusetts are the independent
auditors for the Fund. Deloitte & Touche, Grand Cayman are the independent
auditors for the Portfolio.
NET ASSET VALUE
The Fund's net asset value per share is determined once daily at 4:00
P.M., New York time on each day the New York Stock Exchange is open for regular
trading.
The determination of the Fund's net asset value per share is made by
subtracting from the value of the total assets of the Fund (i.e., the value of
its investment in the Portfolio and other assets) the amount of its liabilities
and dividing the difference by the number of shares of the Fund outstanding at
18
<PAGE>
the time the determination is made.
The value of the Fund's investment in the Portfolio is also 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 the value of the Fund's investment in the
Portfolio is made by subtracting from the value of the total assets of the
Portfolio the amount of the Portfolio's liabilities and multiplying the
difference by the percentage, effective for that day, which represents the
Fund's share of the aggregate beneficial interests in the Portfolio.
Values of assets held by the Portfolio are determined on the basis of
their market or other fair value. (See "Determination of Net Asset Value;
Redemption in Kind" in the Statement of Additional Information.)
DIVIDENDS AND DISTRIBUTIONS
Substantially all of the Fund's net investment income ("Net Income"),
including its pro rata share of the Portfolio's net income and realized net
short-term capital gains in excess of net long-term capital losses is declared
and paid to Fund shareholders at least annually as a dividend, and substantially
all of the Fund's pro rata share of the Portfolio's realized net long-term
capital gains in excess of net short-term capital losses is declared and paid to
Fund 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
the Fund. (See "Taxes" below.) Dividends and capital gains distributions are
payable to Fund shareholders of record on the record date.
Unless a shareholder whose shares are held directly in the
shareholder's name on the books of the Corporation elects to have dividends and
capital gains distributions paid in cash, 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.
Each Eligible Institution and each Financial Intermediary may establish
its own policy with respect to the reinvestment of dividends and capital gains
distributions in additional Fund shares.
TAXES
Each year, the Corporation intends to continue to qualify the Fund and
elect that the Fund be treated as a separate "regulated investment company"
under the Internal Revenue Code of 1986, as amended. Accordingly, the Fund is
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
19
<PAGE>
its shareholders. A 4% non-deductible excise tax is imposed on the Fund to the
extent that certain distribution requirements for the Fund for each calendar
year are not met. The Corporation intends to continue to meet such requirements.
The Portfolio is also not required to pay any federal income or excise taxes.
Dividends are taxable to shareholders of the Fund as ordinary income,
whether such dividends are paid in cash or reinvested in additional shares.
Dividends paid from the Fund may be eligible for the dividends-received
deduction allowed to corporate shareholders because all or a portion of the
Portfolio's net income may 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
is reduced below a shareholder's cost as a result of such a dividend or capital
gains distribution, the dividend or capital gains distribution, although
constituting a return of invested capital, would be taxable as described above.
Any gain or loss realized on the redemption of Fund shares by a shareholder who
is not a dealer in securities is treated as long-term capital gain or loss if
the shares have been held for more than one year, and otherwise as short-term
capital gain or loss. However, any loss realized by a shareholder upon the
redemption of shares in the Fund held one year or less is treated as a long-term
capital loss to the extent of any long-term capital gains distributions received
by the shareholder with respect to such shares.
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
The Fund is designed for investors who are either citizens of the
United States or aliens subject to United States income tax. Prospective
investors who are not citizens of the United States and who are not aliens
subject to United States income tax are subject to United States withholding tax
on the entire
20
<PAGE>
amount of all dividends.
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 the Fund's fiscal year. Additional tax information is mailed to
shareholders in January.
This tax discussion is based on the tax laws and regulations in effect
on the date of this Prospectus, however such laws and regulations are subject to
change. Shareholders and prospective investors are urged to consult their tax
advisors regarding specific questions relevant to their particular
circumstances.
DESCRIPTION OF SHARES
The 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 shares have been classified as shares of the Fund. The Board of
Directors of the Corporation may increase the number of shares the Corporation
is authorized to issue without the approval of shareholders. The Board of
Directors of the Corporation 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 seven such series in addition
to the Fund.
Each share of the Fund represents an equal proportional interest in the
Fund with each other share. Upon liquidation of the Fund, shareholders are
entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.
Shareholders of the Fund are entitled to a full vote for each full
share held and to a fractional vote for fractional shares. The voting rights of
shareholders are not cumulative. Shares have no preemptive or conversion rights.
The rights of redemption are described elsewhere herein. Shares are fully paid
and nonassessable by the Corporation. It is the intention of the Corporation not
to hold meetings of shareholders annually. The Directors of the Corporation 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 of the
Corporation by a specified number of shareholders) the right to communicate with
other shareholders in connection with requesting a meeting of shareholders for
21
<PAGE>
the purpose of removing one or more Directors of the Corporation. Shareholders
also have the right to remove one or more Directors of the Corporation 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 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 Corporation's Articles of Incorporation provide that, at any
meeting of shareholders of the Fund, each Eligible Institution may vote any
shares as to which that Eligible Institution is the agent of record and which
are otherwise not represented in person or by proxy at the meeting,
proportionately in accordance with the votes cast by holders of all shares
otherwise represented at the meeting in person or by proxy as to which that
Eligible Institution is the agent of record. Any shares so voted by an Eligible
Institution are deemed represented at the meeting for purposes of quorum
requirements.
The Portfolio, in which all of the assets of the Fund are invested, is
organized as a trust under the law of the State of New York. The Portfolio's
Declaration of Trust provides that the Fund and other entities investing in the
Portfolio (e.g., other investment companies, insurance company separate accounts
and common and commingled trust funds) are each liable for all obligations of
the Portfolio. However, the risk of the Fund incurring financial loss on account
of such liability is limited to circumstances in which both inadequate insurance
existed and the Portfolio itself was unable to meet its obligations.
Accordingly, the Directors of the Corporation believe that neither the Fund nor
its shareholders will be adversely affected by reason of the investment of all
of the assets of the Fund in the Portfolio.
Each investor in the Portfolio, including the Fund, may add to or
reduce its investment in the Portfolio on each day the New York Stock Exchange
is open for regular trading. At 4:00 P.M., New York time on each such business
day, the value of each investor's beneficial interest in the Portfolio is
determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents that investor's share of
the aggregate beneficial interests in the Portfolio. Any additions or
withdrawals, which are to be effected on that day, are then effected. The
investor's percentage of the aggregate beneficial interests in the Portfolio is
then recomputed as the percentage equal to the fraction (i) the numerator of
which is the value of such investor's investment in the Portfolio as of 4:00
P.M., New York time on such day plus or minus, as the case may be, the amount of
any additions to or withdrawals from the investor's investment in the Portfolio
effected on such day, and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of 4:00 P.M., New York time on such day plus or
minus, as the case may be, the amount of the net additions to or withdrawals
from the aggregate investments in the Portfolio by all investors in the
Portfolio. The percentage so determined is then applied to determine the value
of the investor's interest in the Portfolio as of 4:00 P.M., New York time on
the following business day of
22
<PAGE>
the Portfolio.
Whenever the Corporation is requested to vote on a matter pertaining to
the Portfolio, the Corporation will vote its shares without a meeting of
shareholders of the Fund if the proposal is one, if which made with respect to
the Fund, would not require the vote of shareholders of the Fund, as long as
such action is permissible under applicable statutory and regulatory
requirements. For all other matters requiring a vote, the Corporation will hold
a meeting of shareholders of the Fund and, at the meeting of investors in the
Portfolio, the Corporation will cast all of its votes in the same proportion as
the votes of the Fund's shareholders even if all Fund shareholders did not vote.
Even if the Corporation votes all its shares at the Portfolio meeting, other
investors with a greater pro rata ownership in the Portfolio could have
effective voting control of the operations of the Portfolio.
ADDITIONAL INFORMATION
As used in this Prospectus, the term "majority of the outstanding
voting securities" (as defined in the 1940 Act) currently means the vote of (i)
67% or more of the outstanding voting securities present at a meeting, if the
holders of more than 50% of the outstanding voting securities are present in
person or represented by proxy; or (ii) more than 50% of the outstanding voting
securities, whichever is less.
Fund shareholders receive semi-annual reports containing unaudited
financial statements and annual reports containing financial statements audited
by independent auditors. The annual report also contains performance information
and is made available to investors upon request and without charge.
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 sales commissions and other operating expenses
which may generate different aggregate performance results. Information
concerning other investors in the Portfolio is available from Brown Brothers
Harriman & Co. (See the back cover for the address and phone number.)
The Corporation may withdraw the Fund's investment in the Portfolio as
a result of certain changes in the Portfolio's investment objective, policies or
restrictions or if the Board of Directors of the Corporation determines that it
is otherwise in the best interests of the Fund to do so. Upon any such
withdrawal, the Board of Directors of the Corporation would consider what action
might be taken, including the investment of all of the assets of the Fund in
another pooled investment entity or the retaining of an investment adviser to
manage the Fund's assets in accordance with the investment policies of the
Portfolio (See "Investment Objective and Policies" on page 5). In the event the
Directors of the Corporation were unable to accomplish either, the Directors
will determine the best course of action.
A confirmation of each purchase and redemption transaction is issued on
execution of that transaction.
23
<PAGE>
The Fund's performance may be used from time to time in shareholder
reports or other communications to shareholders or prospective investors.
Performance figures are based on historical earnings and are not intended to
indicate future performance. Performance information may include the Fund's
investment results and/or comparisons of its investment results to various
unmanaged indexes (such as Standard & Poor's Mid-Cap 400 Index and Russell Mid-
Cap Index) 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
are used on a consistent basis. The Fund's investment results as used in such
communications are calculated on a total rate of return basis in the manner set
forth below.
Period and average annualized "total rates of return" may be provided
in such communications. The "total rate of return" refers to the change in the
value of an investment in the Fund over a stated period based on any change in
net asset value per share and including the value of any shares purchasable with
any dividends or capital gains distributions during such period. Period total
rates of return may be annualized. An annualized total rate of return is a
compounded total rate of return which assumes that the period total rate of
return is generated over a one year period, and that all dividends and capital
gains distributions are reinvested. An annualized total rate of return is
slightly higher than a period total rate of return if the period is shorter than
one year, because of the assumed reinvestment.
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.
24
<PAGE>
APPENDIX - HEDGING STRATEGIES
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) and
the New York Stock Exchange Composite Index (New York Stock Exchange) and the
Russell 2000 Index (Chicago Board of Options 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 will be equal to such difference between the closing
price of the index and the strike price of the option expressed in U.S. dollars
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 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 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.
The Corporation may terminate an option that it has written prior to
its expiration by entering into a closing purchase transaction in which it
purchases an option having the same terms as the option written. It is possible,
however, that illiquidity in the options markets may make it difficult from time
to time for the Corporation to close out its written option positions. Also, the
securities exchanges have established limitations on the number of options which
may be written by an investor or group of investors acting in concert. It is not
contemplated that these position limits will have any adverse impact on the
Corporation's portfolio strategies.
FUTURES CONTRACTS ON STOCK INDEXES. 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, futures contracts
on stock indexes ("Futures Contracts") may be entered into for the Portfolio.
25
<PAGE>
In order to assure that the Portfolio is not deemed a "commodity pool"
for purposes of the Commodity Exchange Act, regulations of the Commodity Futures
Trading Commission ("CFTC") require that the Portfolio enter into transactions
in futures contracts and options on futures contracts only (i) for bona fide
hedging purposes (as defined in CFTC regulations), or (ii) for non-hedging
purposes, provided that the aggregate initial margin and premiums on such
non-hedging positions does not exceed 5% of the liquidation value of the
Portfolio's assets.
Futures Contracts provide for the making and acceptance of a cash
settlement based upon changes in the value of an index of stocks and are used to
hedge against anticipated future changes in overall stock market prices which
otherwise might either adversely affect the value of securities held for the
Portfolio or adversely affect the prices of securities which are intended to be
purchased at a later date. A Futures Contract may also be entered into to close
out or offset an existing futures position.
In general, each transaction in Futures Contracts involves the
establishment of a position which is expected to move in a direction opposite to
that of the investment being hedged. If these hedging transactions are
successful, the futures positions taken would rise in value by an amount which
approximately offsets the decline in value of the portion of the Portfolio's
investments that is being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not be
achieved or a loss may be realized. There is also the risk of a potential lack
of liquidity in the secondary market.
The effectiveness of entering into Futures Contracts as a hedging
technique depends upon the extent of which price movements in the portion of the
securities portfolio being hedged correlate with price movements of the stock
index selected. The value of a Futures Contract depends upon future movements in
the level of the overall stock market measured by the underlying index before
the closing out of the Futures Contract. Accordingly, the successful use of
Futures Contracts 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. The incorrect choice of an index or an incorrect
assessment of the future price movements over the short term in the overall
stock market may result in a poorer overall performance than if a Futures
Contract had not been purchased. Brokerage costs are incurred in entering into
and maintaining Futures Contracts.
When the Portfolio enters into a Futures Contract, it is initially
required to deposit, in a segregated account in the name of the broker
performing in the transaction, an "initial margin" of cash, U.S. Government
securities or other high grade liquid obligations equal to approximately 3% of
the contract amount. Initial margin requirements are established by the
exchanges on which Futures Contracts trade and may, from time to time, change.
In addition, brokers may establish margin deposit requirements in excess of
those required by the exchanges. Initial margin in futures transactions is
different from margin in securities transactions in that initial margin does not
involve the borrowing of funds by a broker's client but is, rather, a good faith
deposit on the Futures Contract which will be returned upon the proper
26
<PAGE>
termination of the Futures Contract. The margin deposits made are marked to
market daily and the Portfolio may be required to make subsequent deposits of
cash or eligible securities called "variation margin", with its futures contract
clearing broker, which are reflective of price fluctuations in the Futures
Contract.
Currently, Futures Contracts can be purchased on stock indexes such as
the Standard & Poor's 500 Stock Index (Chicago Board of Options Exchange), the
Russell 2000 Index (Chicago Board of Options Exchange) and the New York Stock
Exchange Composite Index (New York Stock Exchange).
Exchanges may limit the amount by which the price of a Futures Contract
may move on any day. If the price moves equal the daily limit on successive
days, then it may prove impossible to liquidate a futures position until the
daily limit moves have ceased.
27
<PAGE>
The 59 Wall Street Fund, Inc.
Investment Adviser and Administrator
of the Corporation
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
(800) 625-5759
No dealer, salesman or any other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus and the Statement of Additional Information, in connection with the
offer contained in this Prospectus, and if given or made, such other information
or representations must not be relied upon as having been authorized by the
Corporation or the Distributor. This Prospectus does not constitute an offer by
the Corporation or by the Distributor to sell or the solicitation of any offer
to buy any of the securities offered hereby in any jurisdiction to any person to
whom it is unlawful for the Corporation or the Distributor to make such offer in
such jurisdiction.
ws5520D
<PAGE>
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
THE 59 WALL STREET MID-CAP FUND
6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
================================================================================
The 59 Wall Street Mid-Cap Fund (the "Fund") is a separate portfolio of
The 59 Wall Street Fund, Inc. (the "Corporation"), a management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Fund is designed to enable investors to participate in the
opportunities available in the middle capitalization segment of the U.S. equity
market. The investment objective of the Fund is to provide investors with
long-term maximization of total return, primarily through capital appreciation
from investments in equity securities of middle-sized companies. The Corporation
seeks to achieve the investment objective of the Fund by investing all of the
Fund's assets in the U.S. Mid-Cap Portfolio (the "Portfolio"), a diversified
open-end investment company having the same investment objective as the Fund.
There can be no assurance that the Fund's investment objective will be achieved.
Brown Brothers Harriman & Co. is the investment adviser (the
"Investment Adviser") of the Portfolio. This Statement of Additional Information
is not a prospectus and should be read in conjunction with the Prospectus dated
, 1997, a copy of which may be obtained from the Corporation at the address
noted above.
TABLE OF CONTENTS
CROSS-REFERENCE TO
PAGE PAGE IN PROSPECTUS
Investment Objective and Policies . . . . . 2 4
Investment Restrictions . . . . . . . . 4 8
Directors, Trustees and Officers . . . . . 6 12
Investment Adviser . . . . . . . . . . 9 13
Administrators. . . . . . . . . . . . 11 14
Distributor . . . . . . . . . . . . 11 17
Net Asset Value; Redemption in Kind . . . . 12 18
Computation of Performance . . . . . . . 13 7
Federal Taxes . . . . . . . . . . . . 13 19
Description of Shares . . . . . . . . . 15 21
Portfolio Transactions . . . . . . . . . 16 5
Additional Information . . . . . . . . . 18 23
Financial Statements . . . . . . . . .
THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS , 1997.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
===============================================================================
The following supplements the information contained in the Prospectus
concerning the investment objective, policies and techniques of the Portfolio.
EQUITY INVESTMENTS
Equity investments may or may not pay dividends and may or may not
carry voting rights. Common stock occupies the most junior position in a
company's capital structure. Convertible securities entitle the holder to
exchange the securities for a specified number of shares of common stock,
usually of the same company, at specified prices within a certain period of time
and to receive interest or dividends until the holder elects to convert. The
provisions of any convertible security determine its ranking in a company's
capital structure. In the case of subordinated convertible debentures, the
holder's claims on assets and earnings are subordinated to the claims of other
creditors, and are senior to the claims of preferred and common shareholders. In
the case of convertible preferred stock, the holder's claims on assets and
earnings are subordinated to the claims of all creditors and are senior to the
claims of common shareholders.
OPTIONS ON STOCK. For the sole purpose of reducing risk, put and call
options on stocks may be purchased for the Portfolio, although the current
intention is not to do so in such a manner that more than 5% of the Portfolio's
net assets would be at risk. A call option on a stock gives the purchaser of the
option the right to buy the underlying stock at a fixed price at any time during
the option period. Similarly, a put option gives the purchaser of the option the
right to sell the underlying stock at a fixed price at any time during the
option period. To liquidate a put or call option position, a "closing sale
transaction" may be made at any time prior to the expiration of the option which
involves selling the option previously purchased. Over-the-counter options ("OTC
Options") purchased are treated as not readily marketable. (See "Investment
Restrictions").
Covered call options may also be sold (written) on stocks, although in
each case the current intention is not to do so. A call option is "covered" if
the writer owns the underlying security.
LOANS OF PORTFOLIO SECURITIES
Securities of the Portfolio may be loaned if such loans are secured
continuously by cash or equivalent liquid securities as collateral or by an
irrevocable letter of credit in favor of the Portfolio at least equal at all
times to 100% of the market value of the securities loaned plus accrued income.
While such securities are on loan, the borrower pays the Portfolio any income
accruing thereon, and cash collateral may be invested for the Portfolio, thereby
earning additional income. All or any portion of interest earned on invested
collateral may be paid to the borrower. Loans are subject to termination by the
Portfolio in the normal settlement time, currently three business days after
notice, or by the borrower on one day's notice. Borrowed securities are returned
when the loan is terminated. Any appreciation or depreciation in the market
2
<PAGE>
price of the borrowed securities which occurs during the term of the loan inures
to the Portfolio and its investors. Reasonable finders' and custodial fees may
be paid in connection with a loan. In addition, all facts and circumstances,
including the creditworthiness of the borrowing financial institution, are
considered before a loan is made and no loan is made in excess of one year.
There is the risk that a borrowed security may not be returned to the Portfolio.
Securities are not loaned to Brown Brothers Harriman & Co. or to any affiliate
of the Corporation, the Portfolio or Brown Brothers Harriman & Co.
SHORT-TERM INVESTMENTS
Although it is intended that the assets of the Portfolio stay invested
in the securities described above and in the Prospectus to the extent practical
in light of the Portfolio's investment objective and long-term investment
perspective, assets of the Portfolio may be invested in short-term instruments
to meet anticipated expenses or for day-to-day operating purposes and when, in
the Investment Adviser's opinion, it is advisable to adopt a temporary defensive
position because of unusual and adverse conditions affecting the equity markets.
In addition, when the Portfolio experiences large cash inflows through
additional investments by its investors or the sale of portfolio securities, and
desirable equity securities that are consistent with its investment objective
are unavailable in sufficient quantities, assets may be held in short-term
investments for a limited time pending availability of such equity securities.
Short-term instruments consist of U.S. dollar denominated: (i) securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities; (ii)
commercial paper; (iii) bank obligations, including negotiable certificates of
deposit, fixed time deposits and bankers' acceptances; and (iv) repurchase
agreements. Time deposits with a maturity of more than seven days are treated as
not readily marketable (see clause (vi) under the caption "State and Federal
Restrictions"). At the time the Portfolio's assets are invested in commercial
paper, bank obligations or repurchase agreements, the issuer must have
outstanding debt rated A or higher by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Corporation ("Standard & Poor's"); or the
issuer's parent corporation, if any, must have outstanding commercial paper
rated Prime-1 by Moody's or A-1 by Standard & Poor's.
REPURCHASE AGREEMENTS. Repurchase agreements may be entered into for
the Portfolio 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 Portfolio
the security sold at a mutually agreed upon time and price. As such, it is
viewed as the lending of money to the Lender. The resale price normally is in
excess of the purchase price, reflecting an agreed upon interest rate. The rate
is effective for the period of time assets of the Portfolio are invested in the
agreement and is not related to the coupon rate on the underlying security. The
period of these repurchase agreements is usually short, from overnight to one
week. The securities which are subject to repurchase agreements, however, may
have maturity dates in excess of one week from the effective date of the
repurchase agreement. The Portfolio always receives as collateral securities
which are issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Collateral is marked to the market daily and has a market
3
<PAGE>
value including accrued interest at least equal to 100% of the dollar amount
invested on behalf of the Portfolio in each agreement along with accrued
interest. Payment for such securities is made for the Portfolio only upon
physical delivery or evidence of book entry transfer to the account of State
Street Bank and Trust Company (the "Custodian"). If the Lender defaults, the
Portfolio might incur a loss if the value of the collateral securing the
repurchase agreement declines and might incur disposition costs in connection
with liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the Lender, realization upon the collateral on behalf
of the Portfolio may be delayed or limited in certain circumstances. A
repurchase agreement with more than seven days to maturity may not be entered
into for the Portfolio if, as a result, more than 10% of the Portfolio's net
assets would be invested in such repurchase agreement together with any other
instrument which is not readily marketable (see clause (vi) under the caption
"State and Federal Restrictions").
INVESTMENT RESTRICTIONS
================================================================================
The Fund and the Portfolio are operated under the following investment
restrictions which are deemed fundamental policies and may be changed only with
the approval of the holders of a "majority of the outstanding voting securities"
(as defined in the 1940 Act) of the Fund or the Portfolio, as the case may be
(see "Additional Information").
Except that the Corporation 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, neither the Portfolio nor the
Corporation, with respect to the Fund, may:
(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
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 will be borrowed
only from banks and only either to accommodate requests for the redemption of
Fund shares or the withdrawal of part or all of an interest in the Portfolio, as
the case may be, 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), provided that
collateral arrangements with respect to options and futures, including deposits
of initial deposit and variation margin, are not considered a pledge of assets
for purposes of this restriction 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; for additional related
restrictions (see clause (i) under the caption "State and Federal
Restrictions");
(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 and except that deposits of
initial deposit and variation margin may be made in connection with the
purchase, ownership, holding or sale of futures;
4
<PAGE>
(3) write, purchase or sell any put or call option or any combination
thereof, provided that this shall not prevent (i) the purchase, ownership,
holding or sale of warrants where the grantor of the warrants is the issuer of
the underlying securities, or (ii) the purchase, ownership, holding or sale of
futures and options, other than the writing of put options;
(4) underwrite securities issued by other persons except insofar as it
may technically be deemed an underwriter under the Securities Act of 1933 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 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 net assets is 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 short-term
commercial paper or 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 its net
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
(except futures and option 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 as, 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; such
sales would not be made of securities subject to outstanding options);
(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, except that positions in futures or option contracts shall
not be subject to this restriction;
5
<PAGE>
(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, provided that collateral arrangements
with respect to options and futures, including deposits of initial deposit and
variation margin, are not considered to be the issuance of a senior security for
purposes of this restriction; or
(11) invest more than 5% of its total assets in the securities or
obligations of any one issuer (other than U.S. Government obligations) or more
than 10% of its total assets in the outstanding voting securities of any one
issuer; provided, however, that up to 25% of its total assets may be invested
without regard to this restriction.
STATE AND FEDERAL RESTRICTION. In order to comply with certain state
and federal statutes and policies neither the Portfolio nor the Corporation, on
behalf of the Fund, may as a matter of operating policy (except that the
Corporation 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) invest more than 10% of its net assets (taken at the
greater of cost or market value) in restricted securities or invest more than
15% of its net assets in over-the-counter options, time deposits with a maturity
of more than seven days, repurchase agreements maturing in more than seven days
and other securities that are illiquid or otherwise not readily marketable. This
policy is not fundamental and may be changed without shareholder or investor
approval in response to changes in the various state and federal requirements.
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. If the Fund's and the
Portfolio's respective investment restrictions relating to any particular
investment practice or policy are not consistent, the Portfolio has agreed with
the Corporation, on behalf of the Fund, that the Portfolio will adhere to the
more restrictive limitation.
DIRECTORS, TRUSTEES AND OFFICERS
================================================================================
The Directors of the Corporation, Trustees of the Portfolio and
executive officers of the Corporation and the Portfolio, their principal
occupations during the past five years (although their titles may have varied
during the period) and business addresses are:
DIRECTORS OF THE CORPORATION
J.V. SHIELDS, JR.* -- Chairman of the Board and Director; Trustee of
The 59 Wall Street Trust; Managing Director, Chairman and Chief Executive
Officer of Shields & Company; Chairman and Chief Executive Officer of Capital
Management
6
<PAGE>
Associates, Inc.; Director of Flowers Industries, Inc.(1) His business address
is Shields & Company, 140 Broadway, New York, NY 10005.
EUGENE P. BEARD** -- Director; Trustee of The 59 Wall Street Trust
(since April 1993); Vice Chairman - 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** -- Director; Trustee of The 59 Wall Street Trust;
Chairman and Chief Executive Officer - AT&T Investment Management Corporation;
Director of Dreyfus Mutual Funds, Equity Fund of Latin America, New World
Balanced Fund, India Magnum Fund, and U.S. Prime Properties Inc.; Trustee of
Corporate Property Investors. His business address 3 Tall Oaks Drive, Warren, NJ
07059.
ALAN G. LOWY** -- Director; Trustee of The 59 Wall Street Trust (since
April 1993); 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** -- Director; Trustee of The 59 Wall Street
Trust Vice President and Chief Financial Officer of Richard K. Mellon and Sons;
Treasurer of Richard King Mellon Foundation; Vought Aircraft Corporation (prior
to September 1994), Caterair International (prior to April 1994); Advisory
Committee of Carlyle Group and Pittsburgh Seed Fund and Valuation Committee of
Morgenthaler Venture Funds(2). His business address is Richard K. Mellon and
Sons, P.O. Box RKM, Ligonier, PA 15658.
TRUSTEES OF THE PORTFOLIO
H.B. ALVORD** -- Chairman of the Board and Trustee; Retired; Trustee of
the Trust (from September 1990 to October 1994); Director of The 59 Wall Street
Fund, Inc. (from September 1990 to October 1994); Trustee of Landmark Funds III,
Landmark Tax Free Reserves, Landmark Multi-State Tax Free Funds, Landmark Tax
Free Income Funds, Landmark Fixed Income Funds, Landmark Funds I, Landmark Funds
II, and Landmark International Equity Fund. His business address is P.O. Box
5203, Carmel, CA 93921.
RICHARD L. CARPENTER** -- Trustee; Retired; Director of Internal
Investments, Public School Employees' Retirement System (prior to December
1995). His business address is 61 Cliff Street, Burlington, VT 05401.
CLIFFORD A. CLARK** -- Trustee; Retired; Director of Schmid, Inc.
(prior to July 1993); Managing Director of the Smith-Denison Foundation. His
business address is 42 Clowes Drive, Falmouth, MA 02540.
DAVID M. SEITZMAN** -- Trustee; Practicing Physician with Seitzman,
Shuman, Kwart and Phillips; Director of the National Capital Underwriting
Company, Commonwealth Medical Liability Insurance Co. and National Capital
Insurance Brokerage, Limited. His business address is 7117 Nevis Road, Bethesda,
MD 20817.
7
<PAGE>
OFFICERS OF THE CORPORATION AND THE PORTFOLIO
PHILIP W. COOLIDGE -- President; 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") (since June 1993).
JAMES E. HOOLAHAN -- Vice President; Senior Vice President of SFG.
JOHN R. ELDER -- Treasurer; Vice President of SFG (since April 1995);
Treasurer of Phoenix Family of Mutual Funds (prior to April 1995).
LINDA T. GIBSON -- Secretary, Vice President and Assistant Secretary of
SFG (since June 1991); Assistant Secretary of 59 Wall Street Distributors and 59
Wall Street Administrators (since June 1993); graduate student, Boston
University School of Law (prior to May 1992).
SUSAN JAKUBOSKI*** -- Assistant Treasurer and Assistant Secretary of
the Portfolio; Assistant Secretary, Assistant Treasurer and Vice President of
Signature Financial Group (Cayman) Limited (since August 1994); Fund Compliance
Administrator of Concord Financial Group, Inc. (from November 1990 to August
1994). Her business address is 17 Grape Bay Drive, Paget, Bermuda PG-06.
MOLLY S. MUGLER -- Assistant Secretary; Legal Counsel and Assistant
Secretary of SFG; Assistant Secretary of 59 Wall Street Distributors and 59 Wall
Street Administrators (since June 1993).
CHRISTINE A. DRAPEAU -- Assistant Secretary; Assistant Vice President,
Signature Financial Group, Inc. (since January 1996); Paralegal and Compliance
Officer, various financial companies (July 1992 to January 1996); Graduate
Student, Bentley College (prior to December 1994).
- -------------------------
* Mr. Shields is an "interested person" of the Corporation and the
Portfolio because of his affiliation with a registered broker-dealer.
** These Directors and Trustees are members of the Audit Committee of the
Corporation or the Portfolio, as the case may be.
*** Ms. Jakuboski is an officer of the Portfolio but is not an officer
of the Corporation.
(1) 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.
(2) Richard K. Mellon and Sons, Richard King Mellon Foundation, Enterprise
Corporation, Vought Aircraft Corporation, Caterair International, The
Carlyle Group and Morgenthaler Venture Funds, with which Mr.
Miltenberger is or has been associated, are a private foundation, a
private foundation, a business development firm, an aircraft
manufacturer, an airline food
8
<PAGE>
services company, a merchant bank, and a venture capital partnership,
respectively.
Each Director and officer of the Corporation listed above holds the
equivalent position with The 59 Wall Street Trust. The address of each officer
of the Corporation is 6 St. James Avenue, Boston, Massachusetts 02116. Messrs.
Coolidge, Hoolahan and Elder and Mss. Gibson, Jakuboski, Mugler and Drapeau also
hold similar positions with other investment companies for which affiliates of
59 Wall Street Distributors serves as the principal underwriter.
Except for Mr. Shields, no Director is an "interested person" of the
Corporation or the Portfolio as that term is defined in the 1940 Act.
The Directors of the Corporation receive a base annual fee of $15,000
(except the Chairman who receives a base annual fee of $20,000) which is paid
jointly by all series of the Corporation and The 59 Wall Street Trust and
allocated among the series based upon their respective net assets. In addition,
each series which has commenced operations pays an annual fee to each Director
of $1,000. The aggregate compensation to each Director from the Corporation and
the Fund Complex (the Fund Complex consists of the Corporation and The 59 Wall
Street Trust which currently consists of three series) was less than $60,000.
The Trustees of the Portfolio receive a base annual fee of $12,000
(except the Chairman who receives a base annual fee of $17,000) which is paid
jointly by the U.S. Money Market Portfolio, U.S. Small Company Portfolio,
International Equity Portfolio, Emerging Markets Portfolio together with the
Portfolio (the "Portfolios") and allocated among the Portfolios based upon their
respective net assets. In addition, each Portfolio which has commenced
operations pays an annual fee to each Trustee of $1,000. The aggregate
compensation to each Trustee from the Portfolios was less than $60,000.
By virtue of the responsibilities assumed by Brown Brothers Harriman &
Co. under the Investment Advisory Agreement with the Portfolio and the
Administration Agreement with the Corporation, and by Brown Brothers Harriman
Trust Company (Cayman) Limited under the Administration Agreement with the
Portfolio (see "Investment Adviser" and "Administrators"), neither the
Corporation nor the Portfolio requires employees other than its officers, and
none of its officers devote full time to the affairs of the Corporation or the
Portfolio, as the case may be, or, other than the Chairmen, receive any
compensation from the Fund or the Portfolio.
As of July 31, 1997, the Directors of the Corporation, Trustees of the
Portfolio and officers of the Corporation and the Portfolio as a group
beneficially owned less than 1% of the outstanding shares of the Corporation and
less than 1% of the aggregate beneficial interests in the Portfolio. At the
close of business on that date, no person, to the knowledge of the management,
owned beneficially more than 5% of the outstanding shares of the Fund nor more
than 5% of the aggregate beneficial interests in the Portfolio.
INVESTMENT ADVISER
==============================================================================
Under its Investment Advisory Agreement with the Portfolio, subject to
the general supervision of the Portfolio's Trustees and in conformance with the
9
<PAGE>
stated policies of the Portfolio, Brown Brothers Harriman & Co. provides
investment advice and portfolio management services to the Portfolio. In this
regard, it is the responsibility of Brown Brothers Harriman & Co. to make the
day-to-day investment decisions for the Portfolio, to place the purchase and
sale orders for portfolio transactions and to manage, generally, the Portfolio's
investments.
The Investment Advisory Agreement between Brown Brothers Harriman & Co.
and the Portfolio is dated August 22, 1995 and remains in effect for two years
from such date and thereafter, but only so long as the agreement is specifically
approved at least annually (i) by a vote of the holders of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Portfolio, or
by the Portfolio's Trustees, and (ii) by a vote of a majority of the Trustees of
the Portfolio who are not parties to the Investment Advisory Agreement or
"interested persons" (as defined in the 1940 Act) of the Portfolio ("Independent
Trustees"), cast in person at a meeting called for the purpose of voting on such
approval. The Investment Advisory Agreement was most recently approved by the
Independent Trustees on December 11, 1996. The Investment Advisory Agreement
terminates automatically if assigned and is terminable at any time without
penalty by a vote of a majority of the Trustees of the Portfolio or by a vote of
the holders of a "majority of the outstanding voting securities" (as defined in
the 1940 Act) of the Portfolio on 60 days' written notice to Brown Brothers
Harriman & Co. and by Brown Brothers Harriman & Co. on 90 days' written notice
to the Portfolio (see "Additional Information").
With respect to the Portfolio, the investment advisory fee paid to the
Investment Adviser is calculated daily and paid monthly at an annual rate equal
to 0.65% of the Portfolio's average daily net assets.
The Glass-Steagall Act prohibits certain financial institutions from
engaging in the business of underwriting, selling or distributing securities and
from sponsoring, organizing or controlling a registered open-end investment
company continuously engaged in the issuance of its shares, such as the Fund.
There is presently no controlling precedent prohibiting financial institutions
such as Brown Brothers Harriman & Co. from performing the investment advisory,
administrative or shareholder servicing/eligible institution functions described
above. If Brown Brothers Harriman & Co. were to terminate its Investment
Advisory Agreement with the Portfolio, or were prohibited from acting in such
capacity, it is expected that the Trustees of the Portfolio would recommend to
the investors that they approve a new investment advisory agreement for the
Portfolio with another qualified adviser. If Brown Brothers Harriman & Co. were
to terminate its Shareholder Servicing Agreement, Eligible Institution Agreement
or Administration Agreement with the Corporation or were prohibited from acting
in any such capacity, its customers would be permitted to remain shareholders of
the Fund and alternative means for providing shareholder services or
administrative services, as the case may be, would be sought. In such event,
although the operation of the Corporation might change, it is not expected that
any shareholders would suffer any adverse financial consequences. However, an
alternative means of providing shareholder services might afford less
convenience to shareholders.
10
<PAGE>
ADMINISTRATORS
==============================================================================
The Administration Agreements between the Corporation and Brown
Brothers Harriman & Co. (dated November 1, 1993) and between the Portfolio and
Brown Brothers Harriman Trust Company (Cayman) Limited (dated August 22, 1995)
will remain in effect for two years from such respective date and thereafter,
but only so long as each such agreement is specifically approved at least
annually in the same manner as the Investment Advisory Agreement (see
"Investment Adviser"). The Independent Directors/Trustees most recently approved
the Corporation's Administration Agreement and the Portfolio's Administration
Agreement on December 18, 1996 and December 11, 1996, respectively. Each
agreement will terminate automatically if assigned by either party thereto and
is terminable by the Corporation or the Portfolio at any time without penalty by
a vote of a majority of the Directors of the Corporation or the Trustees of the
Portfolio, as the case may be, or by a vote of the holders of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Corporation
or the Portfolio, as the case may be (see "Additional Information"). The
Corporation's Administration Agreement is terminable by the Directors of the
Corporation or shareholders of the Corporation on 60 days' written notice to
Brown Brothers Harriman & Co. The Portfolio's Administration Agreement is
terminable by the Trustees of the Portfolio or by the Fund and other investors
in the Portfolio on 60 days' written notice to Brown Brothers Harriman Trust
Company (Cayman) Limited. Each agreement is terminable by the respective
Administrator on 90 days' written notice to the Corporation or the Portfolio, as
the case may be.
The administrative fee payable to Brown Brothers Harriman & Co. from
the Fund is calculated daily and payable monthly at an annual rate equal to
0.125% of the Fund's average daily net assets.
The administrative fee paid to Brown Brothers Harriman Trust Company
(Cayman) Limited by the Portfolio is calculated and paid monthly at an annual
rate equal to 0.035% of the Portfolio's average daily net assets. Brown Brothers
Harriman Trust Company (Cayman) Limited is a wholly-owned subsidiary of Brown
Brothers Harriman Trust Company of New York, which is a wholly-owned subsidiary
of Brown Brothers Harriman & Co.
DISTRIBUTOR
==============================================================================
The Distribution Agreement (dated September 5, 1990, as amended and
restated February 12, 1991) between the Corporation and 59 Wall Street
Distributors remains in effect indefinitely, 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 Distribution Agreement was
most recently approved by the Independent Directors of the Corporation on
February 18, 1997. 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 Directors of the Corporation or by a vote
of the holders of a "majority of the outstanding voting securities" (as defined
in the 1940 Act) of the Fund (see "Additional Information"). The Distribution
Agreement is terminable with respect to the Fund by the Corporation's Directors
or shareholders of the Fund on 60 days' written notice to 59 Wall Street
11
<PAGE>
Distributors. The agreement is terminable by 59 Wall Street Distributors on 90
days' written notice to the Corporation.
NET ASSET VALUE; REDEMPTION IN KIND
==============================================================================
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. (As of the date of this
Statement of Additional Information, such Exchange is 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,
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 (I.E., the value of its investment in the Portfolio and other assets) the
amount of its liabilities, including expenses payable or accrued, and dividing
the difference by the number of shares of the Fund outstanding at the time the
determination is made.
The value of the Portfolio's net assets (I.E., the value of its
securities and other assets less its liabilities, including expenses payable or
accrued) is determined at the same time and on the same days as the net asset
value per share of the Fund is determined. The value of the Fund's investment in
the Portfolio is determined by multiplying the value of the Portfolio's net
assets by the percentage, effective for that day, which represents the Fund's
share of the aggregate beneficial interests in the Portfolio.
The value of investments listed on a domestic securities exchange is
based on the last sale prices as of the regular close of the New York Stock
Exchange (which is currently 4:00 p.m., New York time) or, in the absence of
recorded sales, at the average of readily available closing bid and asked prices
on such Exchange.
Unlisted securities are valued at the average of the quoted bid and
asked prices in the over-the-counter market. The value of each security for
which readily available market quotations exist is based on a decision as to the
broadest and most representative market for such security.
Securities or other assets for which market quotations are not readily
available are valued at fair value in accordance with procedures established by
and under the general supervision and responsibility of the Portfolio's
Trustees. Such procedures include the use of independent pricing services, which
use prices based upon yields or prices of securities of comparable quality,
coupon, maturity and type; indications as to values from dealers; and general
market conditions. Short-term investments which mature in 60 days or less are
valued at amortized cost if their original maturity was 60 days or less, or by
amortizing their value on the 61st day prior to maturity, if their original
maturity when acquired was more than 60 days, unless this is determined not to
represent fair value by the Trustees of the Portfolio.
Subject to the Corporation's compliance with applicable regulations,
the Corporation has reserved the right to pay the redemption price of shares of
a Fund, either totally or partially, by a distribution in kind of portfolio
12
<PAGE>
securities (instead of cash). The securities so distributed would be valued at
the same amount as that assigned to them in calculating the net asset value for
the shares being sold. If a shareholder received a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash. The Corporation has elected, however, to be governed by Rule 18f-1
under the 1940 Act, as a result of which the Corporation is obligated with
respect to any one investor during any 90 day period to redeem shares of a Fund
solely in cash up to the lesser of $250,000 or 1% of that Fund's net assets at
the beginning of such 90 day period.
COMPUTATION OF PERFORMANCE
==============================================================================
The average annual total return of the Fund is calculated for any
period by (a) dividing (i) the sum of the aggregate net asset value per share on
the last day of the period of shares purchased with a $1,000 payment on the
first day of the period and the aggregate net asset value per share on the last
day of the period of shares purchasable with dividends and capital gains
distributions declared during such period with respect to shares purchased on
the first day of such period and with respect to shares purchased with such
dividends and capital gains distributions, by (ii) $1,000, (b) raising the
quotient to a power equal to 1 divided by the number of years in the period, and
(c) subtracting 1 from the result.
The total rate of return of the Fund for any specified period is
calculated by (a) dividing (i) the sum of the aggregate net asset value per
share on the last day of the period of shares purchased with a $1,000 payment on
the first day of the period and the aggregate net asset value per share on the
last day of the period of shares purchasable with dividends and capital gains
distributions declared during such period with respect to shares purchased on
the first day of such period and with respect to shares purchased with such
dividends and capital gains distributions, by (ii) $1,000, and (b) subtracting 1
from the result.
Performance calculations should not be considered a representation of
the average annual or total rate of return of the Fund in the future since the
rates of return are not fixed. Actual total rates of return and average annual
rates of return depend on changes in the market value of, and dividends and
interest received from, the investments held by the Portfolio and the Fund's and
the Portfolio's expenses during the period.
Total and average annual rate of return 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
total rate of return fluctuates, and this should be considered when reviewing
performance or making comparisons.
FEDERAL TAXES
==============================================================================
Each year, the Corporation 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").
13
<PAGE>
Under Subchapter M of the Code the Fund is not subject to federal income taxes
on amounts distributed to shareholders.
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, foreign
currencies 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 and securities of other investment companies). 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.
Gains or losses on sales of securities are treated as long-term capital
gains or losses if the securities have been held for more than one year except
in certain cases where a put has been acquired or a call has been written
thereon. Other gains or losses on the sale of securities are treated as
short-term capital gains or losses. Gains and losses on the sale, lapse or other
termination of options on securities are generally treated as gains and losses
from the sale of securities. If an option written for the Portfolio lapses or is
terminated through a closing transaction, such as a repurchase of the option
from its holder, the Portfolio may realize a short-term capital gain or loss,
depending on whether the premium income is greater or less than the amount paid
in the closing transaction. If securities are sold pursuant to the exercise of a
call option written for them, the premium received would be added to the sale
price of the securities delivered in determining the amount of gain or loss on
the sale. The requirement that less than 30% of the Fund's gross income be
derived from gains from the sale of securities held for less than three months
may limit the Portfolio's ability to write options and engage in transactions
involving stock index futures.
Certain options contracts held for the Portfolio at the end of each
fiscal year are required to be "marked to market" for federal income tax
purposes; that is, treated as having been sold at market value. Sixty percent of
any gain or loss recognized on these deemed sales and on actual dispositions are
treated as long-term capital gain or loss, and the remainder are treated as
short-term capital gain or loss regardless of how long the Portfolio has held
such options. The Portfolio may be required to defer the recognition of losses
on stock or securities to the extent of any unrecognized gain on offsetting
positions held for it.
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
14
<PAGE>
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.
DESCRIPTION OF SHARES
==============================================================================
The Corporation is an open-end management investment company organized
as a Maryland corporation on July 16, 1990. The Articles of Incorporation
currently permit the Corporation to issue 2,500,000,000 shares of common stock,
par value $0.001 per share, of which 25,000,000 shares have been classified as
shares of The 59 Wall Street Mid-Cap Fund. The Corporation currently consists of
eight portfolios.
Shareholders are entitled to one vote for each share held on matters on
which they are entitled to vote. Shareholders in the Corporation do not have
cumulative voting rights, and shareholders owning more than 50% of the
outstanding shares of the Corporation may elect all of the Directors of the
Corporation if they choose to do so and in such event the other shareholders in
the Corporation would not be able to elect any Director. The Corporation is not
required and has no current intention to hold meetings of shareholders annually
but the Corporation will hold special meetings of shareholders when in the
judgment of the Corporation's Directors it is necessary or desirable to submit
matters for a shareholder vote. Shareholders have under certain circumstances
(E.G., upon application and submission of certain specified documents to the
Directors 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. Shares have no preference, pre-emptive,
conversion or similar rights. Shares, when issued, are fully paid and
non-assessable.
Stock certificates are not issued by the Corporation.
The Articles of Incorporation of the Corporation contain a provision
permitted under Maryland Corporation Law which under certain circumstances
eliminates the personal liability of the Corporation's Directors to the
Corporation or its shareholders.
The Articles of Incorporation and the By-Laws of the Corporation
provide that the Corporation indemnify the Directors and officers of the
Corporation to
15
<PAGE>
the full extent permitted by the Maryland Corporation Law, which permits
indemnification of such persons against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Corporation. However, nothing in the Articles of Incorporation
or the By-Laws of the Corporation protects or indemnifies a Director or officer
of the Corporation against any liability to the Corporation or its shareholders
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.
Interests in the Portfolio have no preference, preemptive, conversion
or similar rights, and are fully paid and non-assessable. The Portfolio is not
required to hold annual meetings of investors, but will hold special meetings of
investors when, in the judgment of its Trustees, it is necessary or desirable to
submit matters for an investor vote. Each investor is entitled to a vote in
proportion to the share of its investment in the Portfolio.
PORTFOLIO TRANSACTIONS
==============================================================================
In effecting securities transactions for the Portfolio, 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 research and other investment information provided by the
broker; and the commissions charged. 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.
Portfolio securities are not purchased from or sold to the
Administrator, Distributor or Investment Adviser or any "affiliated person" (as
defined in the 1940 Act) of the Administrator, Distributor or Investment Adviser
when such entities are acting as principals, except to the extent permitted by
law. The Portfolio uses Brown Brothers Harriman & Co. as one of its principal
brokers when, in the judgment of the Investment Adviser, that firm will be able
to obtain a price and execution at least as favorable as other qualified
brokers. As one of the Portfolio's principal brokers, Brown Brothers Harriman &
Co. receives brokerage commissions from the Portfolio.
The use of Brown Brothers Harriman & Co. as a broker for the Portfolio
is subject to the provisions of Rule 11a2-2(T) under the Securities Exchange Act
of 1934 which permits the Portfolio to use Brown Brothers Harriman & Co. as a
broker provided that certain conditions are met.
In addition, under the 1940 Act, commissions paid by the Portfolio to
Brown Brothers Harriman & Co. in connection with a purchase or sale of
securities offered on a securities exchange may not exceed the usual and
customary broker's commission.
The Trustees of the Portfolio from time to time review, among other
things, information relating to the commissions charged by Brown Brothers
Harriman & Co.
16
<PAGE>
to the Portfolio and to its other customers and information concerning the
prevailing level of commissions charged by other qualified brokers. In addition,
the procedures pursuant to which Brown Brothers Harriman & Co. effects brokerage
transactions for the Portfolio are reviewed and approved no less often than
annually by a majority of the non-interested Trustees of the Portfolio.
A portion of the transactions for the Portfolio are executed through
qualified brokers other than Brown Brothers Harriman & Co. In selecting such
brokers, the Investment Adviser may consider the research and other investment
information provided by such brokers. Research services provided by brokers to
which Brown Brothers Harriman & Co. has allocated brokerage business in the past
include economic statistics and forecasting services, industry and company
analyses, portfolio strategy services, quantitative data, and consulting
services from economists and political analysts. Research services furnished by
brokers are used for the benefit of all the Investment Adviser's clients and not
solely or necessarily for the benefit of the Portfolio. The Investment Adviser
believes that the value of research services received is not determinable nor
does such research significantly reduce its expenses. The Portfolio does not
reduce the fee paid to the Investment Adviser by any amount that might be
attributable to the value of such services.
The Investment Adviser may direct a portion of the Portfolio's
securities transactions to certain unaffiliated brokers which in turn use a
portion of the commissions they receive from the Portfolio to pay other
unaffiliated service providers on behalf of the Portfolio for services provided
for which the Portfolio would otherwise be obligated to pay. Such commissions
paid by the Portfolio are at the same rate paid to other brokers for effecting
similar transactions in listed equity securities.
A committee, comprised of officers and partners of Brown Brothers
Harriman & Co. who are portfolio managers of some of Brown Brothers Harriman &
Co.'s managed accounts (the "Managed Accounts"), evaluates semi-annually the
nature and quality of the brokerage and research services provided by brokers,
and, based on this evaluation, establishes a list and projected ranking of
preferred brokers for use in determining the relative amounts of commissions to
be allocated to such brokers. However, in any semi-annual period, brokers not on
the list may be used, and the relative amounts of brokerage commissions paid to
the brokers on the list may vary substantially from the projected rankings.
The Trustees of the Portfolio review regularly the reasonableness of
commissions and other transaction costs incurred for the Portfolio in light of
facts and circumstances deemed relevant from time to time and, in that
connection, receive reports from the Investment Adviser and published data
concerning transaction costs incurred by institutional investors generally.
Over-the-counter purchases and sales are transacted directly with
principal market makers, except in those circumstances in which, in the judgment
of the Investment Adviser, better prices and execution of orders can otherwise
be obtained. If the Portfolio effects a closing transaction with respect to a
futures or option contract, such transaction normally would be executed by the
same broker-dealer who executed the opening transaction. The writing of options
by the Portfolio may be subject to limitations established by each of the
exchanges governing the maximum number of options in each class which may be
written by a single investor or group of investors acting in concert, regardless
17
<PAGE>
of whether the options are written on the same or different exchanges or are
held or written in one or more accounts or through one or more brokers. The
number of options which the Portfolio may write may be affected by options
written by the Investment Adviser for other investment advisory clients. An
exchange may order the liquidation of positions found to be in excess of these
limits, and it may impose certain other sanctions.
On those occasions when Brown Brothers Harriman & Co. deems the
purchase or sale of a security to be in the best interests of the Portfolio as
well as other customers, Brown Brothers Harriman & Co., to the extent permitted
by applicable laws and regulations, may, but is not obligated to, aggregate the
securities to be sold or purchased for the Portfolio with those to be sold or
purchased for other customers in order to obtain best execution, including lower
brokerage commissions, if appropriate. In such event, allocation of the
securities so purchased or sold as well as any expenses incurred in the
transaction are made by Brown Brothers Harriman & Co. in the manner it considers
to be most equitable and consistent with its fiduciary obligations to its
customers, including the Portfolio. In some instances, this procedure might
adversely affect the Portfolio.
ADDITIONAL INFORMATION
==============================================================================
As used in this Statement of Additional Information and the Prospectus,
the term "majority of the outstanding voting securities" (as defined in the 1940
Act) currently means the vote of (i) 67% or more of the outstanding voting
securities present at a meeting, if the holders of more than 50% of the
outstanding voting securities are present in person or represented by proxy; or
(ii) more than 50% of the outstanding voting securities, whichever is less.
Fund shareholders receive semi-annual reports containing unaudited
financial statements and annual reports containing financial statements audited
by independent auditors.
A shareholder's right to receive payment with respect to any redemption
may be suspended or the payment of the redemption proceeds postponed: (i) during
periods when the New York Stock Exchange is closed for other than weekends and
holidays or when regular trading on such Exchange is restricted as determined by
the Securities and Exchange Commission by rule or regulation, (ii) during
periods in which an emergency exists which causes disposal of, or evaluation of
the net asset value of, portfolio securities to be unreasonable or
impracticable, or (iii) for such other periods as the Securities and Exchange
Commission may permit.
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.
18
<PAGE>
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.
WS5526A
19
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements included in Part A:
Not Applicable.
Financial Statements included in Part B:
To be filed by amendment.
C-1
<PAGE>
(b) Exhibits:
1 -- (a) Restated Articles of Incorporation of the Registrant.(7)
-- (b) Establishment and Designation of Series of The 59 Wall
Street U.S. Equity Fund and The 59 Wall Street Short/
Intermediate Fixed Fund.(7)
-- (c) Establishment and Designation of Series of The 59 Wall
Street Small Company Fund.(7)
-- (d) Establishment and Designation of Series of The 59 Wall
Street International Equity Fund.(7)
-- (e) Establishment and Designation of Series of The 59 Wall
Street Short Term Fund. (7)
-- (f) Redesignation of series of The 59 Wall Street Inflation-
Indexed Securities Fund (formerly, The 59 Wall Street
Short/Intermediate Fixed Income Fund). (9)
-- (g) Redesignation of series of The 59 Wall Street Emerging
Markets Fund (formerly, The 59 Wall Street Short Term
Fund).(10)
-- (h) Establishment and Designation of Series of The 59 Wall
Street Mid-Cap Fund.(11)
2 -- Amended and Restated By-Laws of the Registrant.(7)
3 -- Not Applicable.
4 -- Not Applicable.
5 -- (a) Advisory Agreement with respect to The 59 Wall Street
U.S. Equity Fund.(7)
(b) Advisory Agreement with respect to The 59 Wall Street
Short/Intermediate Fixed Income Fund.(7)
6 -- Form of Amended and Restated Distribution Agreement.(3)
7 -- Not Applicable.
8 -- (a) Form of Custody Agreement.(2)
(b) Form of Transfer Agency Agreement.(2)
9 -- (a) Amended and Restated Administration Agreement.(6)
(b) Subadministrative Services Agreement.(6)
(c) Form of License Agreement.(1)
(d) Amended and Restated Shareholder Servicing Agreement.(6)
(1) Appendix A to Amended and Restated Shareholder
Servicing Agreement. (10)
(2) Appendix A to Amended and Restated Shareholder
Servicing Agreement. (11)
(e) Amended and Restated Eligible Institution Agreement.(6)
(1) Appendix A to Amended and Restated Eligible
Institution Agreement. (10)
(2) Appendix A to Amended and Restated Eligible
Institution Agreement. (11)
(f) Form of Expense Reimbursement Agreement with respect to
The 59 Wall Street U.S. Equity Fund.(6)
(g) Form of Expense Reimbursement Agreement with respect to
The 59 Wall Street Short/Intermediate Fixed
Fund.(6)
10 -- Opinion of Counsel (including consent).(2)
C-2
11 -- Independent auditors' consent.(12)
12 -- Not Applicable.
13 -- Copies of investment representation letters from initial
shareholders.(2)
14 -- Not Applicable.
15 -- Not Applicable.
16 -- Schedule for Computation of Performance Quotations.(12)
17 -- Financial Data Schedule.(10)
19 -- Powers of Attorney of Trustees and officers. (8)
- ---------------------
(1)Filed with the initial Registration Statement on July 16, 1990.
(2)Filed with Amendment No. 1 to this Registration Statement on October 9, 1990.
(3)Filed with Amendment No.2 to this Registration Statement on February 14,
1991.
(4)Filed with Amendment No. 5 to this Registration Statement on June 15, 1992.
(5)Filed with Amendment No. 7 to this Registration Statement on March 1, 1993.
(6)Filed with Amendment No.9 to this Registration Statement on
December 30, 1993.
(7)Filed with Amendment No. 24 to this Registration Statement on
February 28, 1996.
(8)Filed with Amendment No. 26 to this Registration Statement on
February 21, 1997.
(9)Filed with Amendment No. 28 to this Registration Statement on
February 28, 1997.
(10)Filed with Amendment No. 29 to this Registration Statement on
May 20, 1997.
(11)Filed herewith.
(12)To be filed by amendment.
Item 25. Persons Controlled by or Under Common Control with Registrant.
See "Directors and Officers" in the Statement of Additional Information
filed as part of this Registration Statement.
Item 26. Number of Holders of Securities.
Title of Class Number of Record Holders
Common Stock (as of July 31, 1997)
The 59 Wall Street Small Company Fund 448
The 59 Wall Street European Equity Fund 1,367
The 59 Wall Street Pacific Basin Equity Fund 1,342
The 59 Wall Street Inflation-Indexed
Securities Fund 92
The 59 Wall Street U.S. Equity Fund 481
The 59 Wall Street International Equity Fund 47
The 59 Wall Street Emerging Markets Fund 92
The 59 Wall Street Mid-Cap Fund 0
C-3
<PAGE>
Item 27. Indemnification
Reference is made to Article VII of Registrant's By-Laws and to Section
5 of the Distribution Agreement between the Registrant and 59 Wall Street
Distributors, Inc.
Registrant, its Directors and officers, and persons affiliated with
them are insured against certain expenses in connection with the defense of
actions, suits or proceedings, and certain liabilities that might be imposed as
a result of such actions, suits or proceedings.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to Directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, officer of controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser.
The Registrant's investment adviser, 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.
C-4
<PAGE>
Item 29. Principal Underwriters.
1. (a) 59 Wall Street Distributors, Inc. ("59 Wall Street
Distributors") and its affiliates, also serves 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., 6 St. James
Avenue, Boston, MA 02116. Unless otherwise
specified, no officer or Director of 59 Wall
Street Distributors serves as an officer or
Director of the Registrant.
Position and Offices with Position and Offices
Name 59 Wall Street Distributors with the Registrant
- ------------- --------------------------- --------------------
Philip W. Coolidge Chief Executive President
Officer, President
and Director
John R. Elder Assistant Treasurer Treasurer
Linda T. Gibson Assistant Secretary Secretary
Molly S. Mugler Assistant Secretary Assistant Secretary
Christine A. Drapeau -- Assistant Secretary
Linwood C. Downs Treasurer --
Robert Davidoff Director --
CMNY Capital, L.P.
135 East 57th Street
New York, NY 10022
Donald Chadwick Director --
Scarborough & Company
110 East 42nd Street
New York, NY 10017
C-5
<PAGE>
Leeds Hackett Director --
National Credit
Management Corporation
10155 York Road
Cockeysville, MD 21030
Laurence E. Levine Director --
First International
Capital Ltd.
130 Sunrise Avenue
Palm Beach, FL 33480
(c) Not Applicable.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained at the offices of:
The 59 Wall Street Fund, Inc.
6 St. James Avenue
Boston, MA 02116
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
(investment adviser, eligible institution
and shareholder servicing agent)
59 Wall Street Distributors, Inc.
6 St. James Avenue
Boston, MA 02116
(distributor)
59 Wall Street Administrators, Inc.
6 St. James Avenue
Boston, MA 02116
(subadministrator)
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
(custodian and transfer agent)
Item 31. Management Services.
Other than as set forth under the caption "Management of the
Corporation" in the Prospectus constituting Part A of the Registration
Statement, Registrant is not a party to any management-related service contract.
Item 32. Undertakings.
(a) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
shareholders upon request and without charge.
(b) The Registrant undertakes to file a post-effective amendment,
including financials, which need not be certified, within four to six months
following the commencement of operations of each of its series. The financial
statements included in such amendment will be as of and for the time period
ended on a date reasonably close or as soon as practicable to the date of the
amendment.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this 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 20th day of
August, 1997.
THE 59 WALL STREET FUND, INC.
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
/s/ J.V. SHIELDS, JR. Director and Chairman of
(J.V. Shields, Jr.) the Board
/s/ PHILIP W. COOLIDGE President (Principal
(Philip W. Coolidge) Executive Officer)
/s/ EUGENE P. BEARD Director
(Eugene P. Beard)
/s/ DAVID P. FELDMAN Director
(David P. Feldman)
/s/ ARTHUR D. MILTENBERGER Director
(Arthur D. Miltenberger)
/s/ ALAN D. LOWY Director
(Alan D. Lowy)
/S/ JOHN R. ELDER Treasurer
(John R. Elder)
<PAGE>
INDEX TO EXHIBITS
1(h) Establishment and Designation of Series of The 59 Wall Street Mid-Cap
Fund.
9(d) Appendix A to Shareholder Servicing Agreement.
9(e) Appendix A to Eligible Institution Agreement.
WS5041E
THE 59 WALL STREET FUND, INC.
Establishment and
Designation of Series of Shares of
Common Stock (par value $0.001 per share)
Pursuant to Section 2-105 of the Maryland General Corporation Law and
Article Fifth, paragraph 3 of the restated charter of the Corporation (the
"Charter"), the Board of Directors of the Corporation hereby establishes and
designates a series of shares of common stock (the "Fund") to have the following
special and relative rights:
1. The Fund shall be named "The 59 Wall Street Mid-Cap Fund" and the
number of shares initially classified and allocated to the Fund is 25,000,000.
2. The Fund shall be authorized to hold cash, invest in securities,
instruments and other properties and use investment techniques as from time to
time described in the Corporation's then currently effective registration
statement under the Securities Act of 1933 to the extent pertaining to the
offering of Shares of the Fund ("Shares"). Each Share, except as provided
herein, shall have the same characteristics as shares of The 59 Wall Street
European Equity Fund, The 59 Wall Street Pacific Basin Equity Fund, The 59 Wall
Street Small Company Fund, The 59 Wall Street Inflation-Indexed Securities Fund,
The 59 Wall Street U.S. Equity Fund, The 59 Wall Street International Equity
Fund and The 59 Wall Street Emerging Markets Fund. The proceeds of sales of
Shares, together with any income and gain thereon, less any diminution or
expenses thereof, shall irrevocably belong to the Fund, unless otherwise
required by law.
3. Shareholders of the Fund shall vote separately as a class on any
matter to the extent required by, and any matter shall be deemed to have been
effectively acted upon with respect to the Fund as provided in, Rule 18f-2, as
from time to time in effect, under the Investment Company Act of 1940, as
amended, or any successor rule, and by the Charter.
4. At any meeting of shareholders of the Fund, an Eligible Institution
or Financial Intermediary (as that term may from time to time be defined in the
applicable then-current prospectus of the Fund) may vote any Shares as to which
such Eligible Institution or Financial Intermediary is the holder or agent of
record and which are not otherwise 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
such Eligible Institution or Financial Intermediary is the holder or agent of
record. Any Shares so voted by an Eligible Institution or Financial Intermediary
will be deemed represented at the meeting for all purposes, including quorum
purposes.
5. All Shares shall be subject to redemption and redeemable at the
option of the Corporation. The Board of Directors may by resolution from time to
time authorize the Corporation to require the redemption of all or any part of
any outstanding Shares, without the vote or consent of shareholders (including
through the establishment of uniform standards with respect to the minimum net
<PAGE>
asset value of a shareholder account), upon the sending of written notice
thereof to each shareholder any of whose Shares are so redeemed and upon such
terms and conditions as the Board of Directors shall deem advisable, out of
funds legally available therefor, at net asset value per Share determined in
accordance with the provisions of the applicable then-current prospectus of the
Fund and to take all other steps deemed necessary or advisable in connection
therewith. The Board of Directors may authorize the closing of those accounts
not meeting the specified minimum standards of net asset value by redeeming all
of the Shares in such accounts.
6. The Fund's Shareholder Servicing Agent and each Eligible Institution
and Financial Intermediary (as those terms are defined in the applicable
then-current prospectus of the Fund) may establish for their respective
customers an involuntary redemption requirement. If the value of a shareholder's
holdings falls below that amount because of a redemption of Shares, the
shareholder's remaining Shares may be redeemed. If such remaining Shares are to
be redeemed, the shareholder will be notified that the value of his holdings has
fallen below that amount and be allowed 60 days to make an additional investment
to enable the shareholder to meet the minimum requirement before the redemption
is processed.
IN WITNESS WHEREOF, the undersigned Directors have executed this
instrument this day of August, 1997.
Director and
Chairman of the Board
J.V. Shields, Jr.
Director
David P. Feldman
Director
Arthur D. Miltenberger
Director
Eugene P. Beard
Director
Alan G. Lowy
WS5041E
APPENDIX A
FUND ANNUAL FEE
The 59 Wall Street Inflation-Indexed Securities Fund 0.25%
The 59 Wall Street U.S. Equity Fund 0.25%
The 59 Wall Street Small Company Fund 0.25%
The 59 Wall Street European Equity Fund 0.25%
The 59 Wall Street Pacific Basin Equity Fund 0.25%
The 59 Wall Street International Equity Fund1 0.25%
The 59 Wall Street Emerging Markets Equity Fund2 0.25%
The 59 Wall Street Mid-Cap Fund3 0.25%
WS5151C
- --------
1Added August 23, 1994.
2Added February 18, 1997.
3Added August 19, 1997.
APPENDIX A
FUND ANNUAL FEE
The 59 Wall Street Inflation-Indexed Securities Fund 0.25%
The 59 Wall Street U.S. Equity Fund 0.25%
The 59 Wall Street Small Company Fund 0.25%
The 59 Wall Street European Equity Fund 0.25%
The 59 Wall Street Pacific Basin Equity Fund 0.25%
The 59 Wall Street International Equity Fund1 0.25%
The 59 Wall Street Emerging Markets Equity Fund2 0.25%
The 59 Wall Street Mid-Cap Fund3 0.25%
WS5182B
- --------
1Added August 23, 1994.
2Added February 18, 1997.
3Added August 19, 1997.
