59 WALL STREET FUND INC, 497, 1999-03-08

59 WALL STREET FUND INC
497, 1999-03-08

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- ---------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
THE 59 WALL STREET U.S. EQUITY FUND
21 Milk Street, Boston, Massachusetts 02109
- ---------------------------------------------------------------
The 59 Wall Street U.S. Equity Fund (the "U.S. Equity Fund" of 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 be invested in a portfolio of equity securities of companies that
are well established and financially sound. The Fund's investment objective is
to provide investors with long-term capital growth while also generating current
income. There can be no assurance that the investment objective of the Fund will
be achieved.

Brown Brothers Harriman & Co. is the investment adviser (the
"Investment Adviser") to the Fund. This Statement of Additional Information is
not a prospectus and should be read in conjunction with the Prospectus dated
March 1, 1999, a copy of which may be obtained from the Corporation at the
address noted above.
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Table of Contents
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Cross-Reference
Page to Page in Prospectus
Investments
Investment Objective and Policies . . . . . . . . . 2 3
Investment Restrictions . . . . . . . . . . . . . . 7
Management
Directors and Officers . . . . . . . . . . . . . . . 9
Investment Adviser . . . . . . . . . . . . . . . . . 13 6
Administrator . . . . . . . . . . . . . . . . . . . 15
Distributor . . . . . . . . . . . . . . . . . . . . 16
Shareholder Servicing Agent, Financial Intermediaries
and Eligible Institutions . . . . . . . . . . . . . .15-18
Custodian, Transfer and Dividend Disbursing Agent 18
Independent Auditors 18
Net Asset Value; Redemption in Kind . . . . . . . . 18 6
Computation of Performance . . . . . . . . . . . . . 19
Purchases and Redemptions 21
Federal Taxes . . . . . . . . . . . . . . . . . . . 21
Description of Shares . . . . . . . . . . . . . . . 24
Portfolio Brokerage Transactions . . . . . . . . . . . . . . .26
Additional Information . . . . . . . . . . . . . . . 28
Financial Statements . . . . . . . . . . . . . . . . 29
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The date of this Statement of Additional Information is
March 1, 1999.

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INVESTMENT OBJECTIVE AND POLICIES
- ---------------------------------------------------------------

The following supplements the information contained in the Prospectus
concerning the investment objective, policies and techniques of the Fund.

In response to adverse market, economic, political or other conditions,
the Investment Adviser may make temporary investments for the Fund that are not
consistent with the investment objective and principal investment strategies of
the Fund. Such investments may prevent the Fund from achieving its investment
objective.

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.

Hedging Stategies

Options on Stock. Subject to applicable laws and regulations and solely
as a hedge against changes in the market value of portfolio securities intended
to be purchased, put and call options on stocks may be purchased for the Fund,
although the current intention is not to do so in such a manner that more than
5% of the Fund'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 for the Fund at any time
prior to the expiration of the option which involves selling the option
previously purchased.

Options on Stock Indexes. Subject to applicable laws and regulations
and solely as a hedge against changes in the market value of portfolio
securities intended to be purchased, put and call options on stock indexes may
be entered into for the Fund. 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).

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 will depend 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 times a
specified multiple.

The effectiveness of purchasing stock index options as a hedging
technique depends upon the extent to which price movements in the portion of the
securities portfolio of the Fund being hedged correlate with price movements of
the stock index selected. The value of an index option depends upon future
movements in the level of the overall stock market measured by the underlying
index before the expiration of the option. Accordingly, the successful use of
options on stock indexes for the Fund is subject to the Investment Adviser=s
ability both to select an appropriate index and to predict future price
movements over the short term in the overall stock market. Brokerage costs are
incurred in the purchase of stock index options and the incorrect choice of an
index or an incorrect assessment of future price movements may result in poorer
overall performance than if a stock nidex 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 liquidity in the options markets may make it difficult from time
to time for the Corporation to close out its written options 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 (AFutures Contracts@) may be entered into for the Fund.

In order to assure that the Fund is not deemed a Acommodity pool@ for
purposes of the Commodity Exchange Act, regulations of the Commodity Futures
Trading Commission (ACFTC@) require that the Fund enter into transactions in
futures contracts and options on futures contracts only (i) for bona fide
hedging purposes (as defined in CTFC 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 Fund=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 the overall stock market prices
which otherwise might either adversely affect the value of securities held for
the Fund or adversely affect the prices 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 Fund=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 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
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 purchase Brokerage costs are incurred in entering into and
maintaining Futures Contracts.

When the Fund enters into a Futures Contract, it may be initially
required to deposit, in a segregated account in the name of the broker
performing the transaction, an Ainitial margin@ of chase, 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
termination of the Futures Contract. The margin deposits made are marked to
market daily and the Fund may be required to make subsequent deposits of chase
or eligible securities called Avariation 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
Standard & Poor's 500 Stock 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 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.

Short-Term Instruments

Although it is intended that the assets of the Fund stay invested in
the securities described above and in the Prospectus to the extent practical in
light of the Fund's investment objective and long-term investment perspective,
the Fund's assets 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 Fund 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 foreign and domestic: (i) short-term
obligations of sovereign governments, their agencies, instrumentalities,
authorities or political subdivisions; (ii) other short-term debt securities
rated A or higher by Moody's Investors Service, Inc. ("Moody's") or Standard &
Poor's Corporation ("Standard & Poor's"), or if unrated are of comparable
quality in the opinion of the Investment Adviser; (iii) commercial paper; (iv)
bank obligations, including negotiable certificates of deposit, fixed time
deposits and bankers' acceptances; and (v) repurchase agreements. Time deposits
with a maturity of more than seven days are treated as not readily marketable.
At the time the Fund'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 or Standard & Poor's; 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; or, if no such ratings are available, the instrument must be
of comparable quality in the opinion of the Investment Adviser. The assets of
the Fund may be invested in non-U.S. dollar denominated and U.S. dollar
denominated short-term instruments, including U.S. dollar denominated repurchase
agreements. Cash is held for the Fund in demand deposit accounts with the Fund's
custodian bank.

U.S. Government Securities

The assets of the Fund 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.

Restricted Securities

Securities that have legal or contractual restrictions on their resale
may be acquired for the Fund. The price paid for these securities, or received
upon resale, may be lower than the price paid or received for similar securities
with a more liquid market. Accordingly, the valuation of these securities
reflects the limitation on their liquidity.

Loans of Portfolio Securities

Loans up to 30% of the total value of the securities of the Fund are
permitted. Securities of the Fund may be loaned if such loans are secured
continuously by cash or equivalent collateral or by an irrevocable letter of
credit in favor of the Fund at least equal at all times to 100% of the market
value of the securities loaned plus accrued income. By lending the securities of
the Fund, the Fund=s income can be increased by the Fund continuing to receive
income on the loaned securities as well as by the opportunity for the Fund to
receive interest on the collateral. All or any portion of interest earned on
invested collateral may be paid to the borrower. Loans are subject to
termination by the Corporation in the normal settlement time, currently three
business days after notice, or by the borrower on one day's notice. Borrowed
securities are returned when the loan is terminated. Any appreciation or
depreciation in the market price of the borrowed securities which occurs during
the term of the loan inures to the Fund and its shareholders. Reasonable
finders' and custodial fees may be paid in connection with a loan. In addition,
all facts and circumstances, including the creditworthiness of the borrowing
financial institution, are considered before a loan is made and no loan is made
in excess of one year. There is the risk that a borrowed security may not be
returned to the Fund. Securities of the Fund are not loaned to Brown Brothers
Harriman & Co. or to any affiliate of the Corporation or Brown Brothers Harriman
& Co.

When-Issued and Delayed Delivery Securities

Securities may be purchased for the Fund on a when-issued or delayed
delivery basis. For example, delivery and payment may take place a month or more
after the date of the transaction. The purchase price and the interest rate
payable on the securities, if any, are fixed on the transaction date. The
securities so purchased are subject to market fluctuation and no income accrues
to the Fund 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 Fund=s net asset value. At the time of its
acquisition, a when-issued or delayed delivery security may be valued at less
than the purchase price. Commitments for such when-issued or delayed delivery
securities are made only when there is an intention of actually acquiring the
securities. On delivery dates for such transactions, such obligations are met
from maturities or sales of securities and/or from cash flow. If the right to
acquire a when-issued or delayed delivery security is disposed of prior to
acquisition, the Fund could, as with the disposition of any other portfolio
obligation, incur a gain or loss due to market fluctuation. When-issued or
delayed delivery commitments for the Fund 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.

INVESTMENT RESTRICTIONS
- ---------------------------------------------------------------
The Fund is operated under the following investment restrictions which
are deemed fundamental policies and may be changed only with the approval of the
holders of a "majority of the Fund's outstanding voting securities" (as defined
in the 1940 Act).

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, the Corporation, with respect to the
Fund, may not:

(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 or the purchase, ownership,
holding, sale or writing of options;

(3) underwrite securities issued by other persons except insofar as it
may technically be deemed an underwriter under the Securities Act of 1933, as
amended, in selling a portfolio security;

(4) 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 (5) 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 is part of an
issue to the public shall not be considered the making of a loan;

(5) 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);

(6) 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);

(7) 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);

(8) 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;

(9) 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;

(10) invest more than 5% of its total assets in the securities or
obligations of any one issuer (other than obligations issued by the U.S.
Government, its agencies or instrumentalities); provided, however, that up to
25% of its total assets may be invested without regard to this restriction; or

(11) purchase more than 10% of the outstanding voting securities of any
one issuer.

Non-Fundamental Restrictions. The Fund may not 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): (i) purchase securities of any
investment company if such purchase at the time thereof would cause more than
10% of its total assets (taken at the greater of cost or market value) to be
invested in the securities of such issuers or would cause more than 3% of the
outstanding voting securities of any such issuer to be held for it; (ii) invest
more than 10% of its net assets (taken at the greater of cost or market value)
in restricted securities; or (iii) invest less than 65% of the value of the
total assets of the Fund in equity securities. These policies are not
fundamental and may be changed without shareholder 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.

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 issuer to an amount not greater in value than 5%
of the Fund's total assets. The Fund does not purchase more than 10% of the
outstanding voting securities of any issuer.

DIRECTORS 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 Directors
and executive officers of the Corporation, 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 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;
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;
Retired; Chairman and Chief Executive Officer - AT&T Investment Management
Corporation (prior to October 1997); 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 is 3 Tall Oaks Drive, Warren, NJ 07059.

ALAN G. LOWY** -- Director; Trustee of The 59 Wall Street Trust;
President of Lowy Industries (since August 1998); 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; Director of Vought Aircraft
Corporation (prior to September 1994), Caterair International (prior to April
1994); Member of 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.

OFFICERS OF THE CORPORATION

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").

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; Senior Vice President and Secretary of
SFG; Secretary of 59 Wall Street Distributors and 59 Wall Street Administrators.

MOLLY S. MUGLER -- Assistant Secretary; Vice President and Assistant
Secretary of SFG; Assistant Secretary of 59 Wall Street Distributors and 59 Wall
Street Administrators.

CHRISTINE A. DRAPEAU - Assistant Secretary; Vice President of SFG
(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 because of
his affiliation with a registered broker-dealer.

** These Directors are members of the Audit Committee 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, 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 services
company, a merchant bank, and a venture capital partnership,
respectively.

Each Director and officer listed above holds the equivalent position
with The 59 Wall Street Trust. The address of each officer is 21 Milk Street,
Boston, Massachusetts 02109. Messrs. Coolidge, Hoolahan, and Elder and Mss.
Gibson, Mugler and Drapeau also hold similar positions with other investment
companies for which affiliates of 59 Wall Street Distributors serve as the
principal underwriter.

Except for Mr. Shields, no Director is an "interested person" of the
Corporation as that term is defined in the 1940 Act.

<PAGE>

Directors of the Corporation

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.
<TABLE>
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Compensation
Pension or from the
Retirement Corporation
Aggregate Benefits Accrued Estimated Annual and Fund
Name of Person, Compensation as Part of Benefits upon Complex Paid
Position from the Corp. Fund Expenses Retirement to Directors

J.V. Shields, Jr., $12,450 none none $31,000
Director

Eugene P. Beard, $11,337 none none 26,000
Director

David P. Feldman, $11,337 none none 26,000
Director

Alan G. Lowy, $11,337 none none 26,000
Director

Arthur D. Miltenberger, $11,337 none none 26,000
Director

<FN>

* The Fund Complex consists of the Corporation and The 59 Wall Street Trust
which currently consists of four series.
</FN>
</TABLE>

By virtue of the responsibilities assumed by Brown Brothers Harriman &
Co. under the Investment Advisory Agreement and the Administration Agreement
(see "Investment Adviser" and "Administrator"), the Corporation does not require
employees other than its officers, and none of its officers devote full time to
the affairs of the Corporation, or, other than the Chairman, receive any
compensation from the Fund.

INVESTMENT ADVISER
- ---------------------------------------------------------------

Under an Investment Advisory Agreement with the Corporation, subject to
the general supervision of the Corporation's Directors and in conformance with
the stated policies of the Fund, Brown Brothers Harriman & Co. provides
investment advice and portfolio management services to the Fund. In this regard,
it is the responsibility of Brown Brothers Harriman & Co. to make the day-to-day
investment decisions for the Fund, to place the purchase and sale orders for
portfolio transactions of the Fund, and to manage, generally, the investments of
the Fund.

The Investment Advisory Agreement between Brown Brothers Harriman & Co.
and the Corporation is dated June 9, 1992, as amended and restated November 1,
1993 and remains in effect for two years from such date and thereafter, but only
as long as the agreement is specifically approved at least annually (i) by a
vote of the holders of a "majority of the Fund's outstanding voting securities"
(as defined in the 1940 Act) or by the Corporation's Directors, and (ii) by a
vote of a majority of the Directors of the Corporation who are not parties to
the Investment Advisory Agreement or "interested persons" (as defined in the
1940 Act) of the Corporation ("Independent Directors") 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 Directors on
November 10, 1998. The Investment Advisory Agreement terminates automatically if
assigned and is terminable 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 Fund's outstanding voting securities@ (as defined in the 1940 Act) on 60
days' written notice to Brown Brothers Harriman & Co. and by Brown Brothers
Harriman & Co. on 90 days' written notice to the Corporation. (See "Additional
Information".)

The investment advisory fee paid to the Investment Adviser is
calculated daily and paid monthly at an annual rate equal to 0.65% of the Fund's
average daily net assets. For the fiscal years ended October 31, 1996, 1997 and
1998, the Fund incurred $277,632, $154,392 and $476,908, respectively, for
advisory services.

The investment advisory services of Brown Brothers Harriman & Co. to
the Fund are not exclusive under the terms of the Investment Advisory
Agreements. Brown Brothers Harriman & Co. is free to and does render investment
advisory services to others, including other registered investment companies.

Pursuant to a license agreement between the Corporation and Brown
Brothers Harriman & Co. dated September 5, 1990, as amended as of December 15,
1993, the Corporation may continue to use in its name "59 Wall Street", the
current and historic address of Brown Brothers Harriman & Co. The agreement may
be terminated by Brown Brothers Harriman & Co. at any time upon written notice
to the Corporation upon the expiration or earlier termination of any investment
advisory agreement between the Corporation or any investment company in which a
series of the Corporation invests all of its assets and Brown Brothers Harriman
& Co. Termination of the agreement would require the Corporation to change its
name and the name of each Fund to eliminate all reference to "59 Wall Street".

Pursuant to license agreements between Brown Brothers Harriman & Co.
and each of 59 Wall Street Administrators and 59 Wall Street Distributors (each
a "Licensee"), dated June 22, 1993 and June 8, 1990, respectively, each Licensee
may continue to use in its name "59 Wall Street", the current and historic
address of Brown Brothers Harriman & Co., only if Brown Brothers Harriman & Co.
does not terminate the respective license agreement, which would require the
Licensee to change its name to eliminate all reference to "59 Wall Street".

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 investment advisory,
administrative or shareholder servicing/eligible institution functions. If Brown
Brothers Harriman & Co. were to terminate its Investment Advisory Agreement with
the Corporation or were prohibited from acting in such capacity, it is expected
that the Directors would recommend the shareholders that they approve a new
investment advisory agreement for the Fund with another qualified adviser. If
Brown Brothers Harriman & Co. were to terminate its 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 Corporation 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.

<PAGE>

ADMINISTRATOR
- ---------------------------------------------------------------
Brown Brothers Harriman & Co. acts as Administrator for the Corporation.
In its capacity as Administrator, Brown Brothers Harriman & Co. administers
all aspects of the Corporation's operations subject to the supervision of the
Corporation's Directors except as set forth below under "Distributor". In
connection with its responsibilities as Administrator and at its own expense,
Brown Brothers Harriman & Co. (i) provides the Corporation with the services of
persons competent to perform such supervisory, administrative and clerical
functions as are necessary in order to provide effective administration of the
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 Custodian, Transfer and Dividend
Disbursing Agent; (iii) provides the Corporation with adequate office space and
communications and other facilities; and (iv) prepares and/or arranges for the
preparation, but does not pay for, the periodic updating of the Corporation's
registration statement and 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 the Fund's shareholders and the Securities and Exchange Commission.

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 21 Milk Street,
Boston, Massachusetts 02109. 59 Wall Street Administrators is a wholly-owned
subsidiary of Signature Financial Group, Inc. ("SFG"). SFG is not affiliated
with Brown Brothers Harriman & Co. 59 Wall Street Administrators'
subadministrative duties may include providing equipment and clerical personnel
necessary for maintaining the organization of the 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.

DISTRIBUTOR

- ---------------------------------------------------------------

59 Wall Street Distributors acts as exclusive Distributor of shares of the
Fund. Its office is located at 21 Milk Street, Boston, Massachusetts 02109. 59
Wall Street Distributors is a wholly-owned subsidiary of SFG. SFG and its
affiliates currently provide administration and distribution services for other
registered investment companies. The Corporation pays for the preparation,
printing and filing of copies of the Corporation's registration statements and
the Fund's prospectus as required under federal and state securities laws.

59 Wall Street Distributors holds itself available to receive purchase
orders for Fund shares.

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 9, 1999. 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 Fund's outstanding voting securities" (as
defined in the 1940 Act). (See "Additional Information".) The Distribution
Agreement is terminable with respect to the Fund by the Corporation's Directors
or shareholders of the Fund on 60 days' written notice to 59 Wall Street
Distributors. The agreement is terminable by 59 Wall Street Distributors on 90
days' written notice to the Corporation.

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 Fund's average daily net assets represented by shares owned during the
period for which payment was being made by shareholders who did not hold their
shares with an Eligible Institution.

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
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 that Fund=s average daily net assets represented by shares owned
during the period for which payment was being made by customers for whom the
financial institution was the holder or agent of record.

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
- ---------------------------------------------------------------
State Street Bank and Trust Company ("State Street" or the "Custodian"),
225 Franklin Street, P.O. Box 351, Boston, Massachusetts 02110, is Custodian,
Transfer and Dividend Disbursing Agent for the Fund.

INDEPENDENT AUDITORS
- ---------------------------------------------------------------
Deloitte & Touche LLP are the independent auditors for the Fund.

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 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 the amount of its liabilities, and dividing the difference by the number
of shares of the Fund outstanding at the time the determination is made.

The value of investments listed on a securities exchange is based on
the last sale prices as of the close of regular trading 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.

Bonds and other fixed income securities (other than short-term
obligations but including listed issues) are valued on the basis of valuations
furnished by a pricing service, use of which has been approved by the Board of
Directors. In making such valuations, the pricing service utilizes both
dealer-supplied valuations and electronic data processing techniques which take
into account appropriate factors such as institutional-size trading in similar
groups of securities, yield, quality, coupon rate, maturity, type of issue,
trading characteristics and other market data, without exclusive reliance upon
quoted prices or exchange or over-the-counter prices, since such valuations are
believed to reflect more accurately the fair value of such securities.

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 Corporation's
Directors. 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 for the Fund was more than 60 days, unless this is determined not to
represent fair value by the Directors.

Subject to the Corporation's compliance with applicable regulations,
the Corporation has reserved the right to pay the redemption price of shares of
the Fund, either totally or partially, by a distribution in kind of portfolio
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 the
Fund solely in cash up to the lesser of $250,000 or 1% of the Fund's net assets
at the beginning of such 90 day period.

COMPUTATION OF PERFORMANCE
- ---------------------------------------------------------------
The average annual total rate of 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.

The average annual total rate of return for the Fund for the period
July 23, 1992 (commencement of operations) to October 31, 1998 was 15.29%. The
average annual total rate of return for the Fund for the fiscal year ended
October 31, 1998 was 2.50%. The average annual total rate of return for the Fund
for the five-year period ended October 31, 1998 was 15.89%.
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 Fund and the Fund'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.

The Fund=s performance may be used from time to time in shareholder
reports or other communications to shareholders or prospective investors.
Performance figures are based on historical earnings and are not intended to
indicate future performance. Performance information may include the Fund's
investment results and/or comparisons of its investment results to various
unmanaged indexes (such as the Standard & Poor=s 500 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 investment.

PURCHASES AND REDEMPTIONS
- ---------------------------------------------------------------
A confirmation of each purchase and redemption transaction is issued on
execution of that transaction.

The Corporation reserves the rights to discontinue, alter or limit the
automatic reinvestment privilege at any time, but will provide shareholders
prior written notice of any such discontinuance, alteration or limitation.

A shareholder's right to receive payment with respect to any redemption
may be suspended or the payment of the redemption proceeds postponed: (i) during
periods when the New York Stock Exchange is closed for other than weekends and
holidays or when regular trading on such Exchange is restricted as determined by
the Securities and Exchange Commission by rule or regulation, (ii) during
periods in which an emergency exists which causes disposal of, or evaluation of
the net asset value of, the Fund's portfolio securities to be unreasonable or
impracticable, or (iii) for such other periods as the Securities and Exchange
Commission may permit.

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.

An investor should be aware that redemptions from the Fund may not be
processed if a completed account application with a certified taxpayer
identification number has not been received.

In the event a shareholder redeems all shares held in the Fund, future
purchases of shares of the Fund by such shareholder would be subject to the
Fund=s minimum initial purchase requirements.

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 the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly,
the Fund is not subject to federal income taxes on its net income and realized
net long-term capital gains that are distributed to its shareholders. A 4%
non-deductible excise tax is imposed on the Fund to the extent that certain
distribution requirements for the Fund for each calendar year are not met. The
Corporation intends to meet such requirements. 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 or other
income derived with respect to its business of investing in such securities; (b)
less than 30% of the Fund's annual gross income be derived from gains (without
offset for losses) from the sale or other disposition of securities held for
less than three months; and (c) the holdings of the Fund be diversified so that,
at the end of each quarter of its fiscal year, (i) at least 50% of the market
value of the Fund's assets be represented by cash, U.S. Government securities
and other securities limited in respect of any one issuer to an amount not
greater than 5% of the Fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of the Fund's
assets be invested in the securities of any one issuer (other than U.S.
Government securities). In addition, in order not to be subject to federal
income tax, at least 90% of the Fund's net investment income and net short-term
capital gains earned in each year must be distributed to the Fund's
shareholders.

Dividends paid from the Fund may be eligible for the dividends-received
deduction allowed to corporate shareholders because all or a portion of the
Fund=s net income may consist of dividends paid by domestic corporations.

Gains or losses on sales of securities for the Fund are treated as
long-term capital gains or losses if the securities have been held by it for
more than one year except in certain cases where a put has been acquired or a
call has been written thereon for the Fund. 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 Fund lapses or is terminated through a closing transaction, such as a
repurchase for the Fund of the option from its holder, the Fund 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 for the Fund pursuant to the exercise of a call option written for it,
the premium received is 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 ability to write
options and engage in transactions involving stock index futures.

Certain options contracts held for the Fund 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 such options were held. The Fund 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. 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 shares is reduced below a shareholder's cost as a result of a dividend
or capital gains distribution by 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 would be treated
as long-term capital gain or loss if the shares have been held for more than one
year, and otherwise as short-term capital gain or loss. However, any loss
realized by a shareholder upon the redemption of Fund shares held one year or
less is treated as a long-term capital loss to the extent of any long-term
capital gains distributions received by the shareholder with respect to such
shares. Additionally, any loss realized on a redemption or exchange of Fund
shares is disallowed to the extent the shares disposed of are replaced within a
period of 61 days beginning 30 days before such disposition, such as pursuant to
reinvestment of a dividend or capital gains distribution in Fund shares.

Other Taxes. The Fund may be subject to state or local taxes in
jurisdictions in which it is deemed to be doing business. In addition, the
treatment of the Fund and its shareholders in those states which have income tax
laws might differ from treatment under the federal income tax laws. Shareholders
should consult their own tax advisors with respect to any state or local taxes.

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.

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.

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
as a Maryland corporation on July 16, 1990. Its offices are located at 21 Milk
Street, Boston, Massachusetts 02109; 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 $0.001 per share, of which
25,000,000 shares have been classified as shares of The 59 Wall Street U.S.
Equity 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
six 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 one full vote for each full
share held and to a fractional vote for fractional shares. 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 as may be required by the
1940 Act or as may be permitted by the Articles of Incorporation or By-laws.
Shareholders have under certain circumstances (e.g., upon application and
submission of certain specified documents to the Directors by a specified number
of shareholders) the right to communicate with other shareholders in connection
with requesting a meeting of shareholders for the purpose of removing one or
more Directors. Shareholders also have the right to remove one or more Directors
without a meeting by a declaration in writing by a specified number of
shareholders. Shares have no preemptive or conversion rights. The rights of
redemption are described in the Prospectus. Shares are fully paid and
non-assessable by the Corporation.

Stock certificates are not issued by the Corporation.

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
meeting of Fund shareholders, except as otherwise required by applicable law.
The Bylaws 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 Articles of Incorporation and the By-Laws of the Corporation
provide that the Corporation indemnify the Directors and officers of the
Corporation to 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.

The Corporation may, in the future, seek to achieve the Fund's
investment objective by investing all of the Fund's investable assets in a
no-load, diversified, open-end management investment company having
substantially the same investment objective as those applicable to the Fund. In
such event, the Fund would no longer directly require investment advisory
services and therefore would pay no investment advisory fees. Further, the
administrative services fee paid from the Fund would be reduced. At a
shareholder's meeting held on September 23, 1993, the Fund's shareholders
approved changes to the investment restrictions of the Fund to authorize such an
investment. Such an investment would be made only if the Directors believe that
the aggregate per share expenses of the Fund and such other investment company
would be less than or approximately equal to the expenses which the Fund would
incur if the Corporation were to continue to retain the services of an
investment adviser for the Fund and the assets of the Fund were to continue to
be invested directly in portfolio securities.

It is expected that the investment of the Fund in another investment
company will have no preference, preemptive, conversion or similar rights, and
will be fully paid and non-assessable. It is expected that the investment
company will not be required to hold annual meetings of investors, but will hold
special meetings of investors when, in the judgment of its trustees, it is
necessary or desirable to submit matters for an investor vote. It is expected
that each investor will be entitled to a vote in proportion to the share of its
investment in such investment company. Except as described below, whenever the
Corporation is requested to vote on matters pertaining to the investment
company, the Corporation would hold a meeting of the Fund's shareholders and
would cast its votes on each matter at a meeting of investors in the investment
company proportionately as instructed by the Fund's shareholders.

PORTFOLIO BROKERAGE TRANSACTIONS
- ---------------------------------------------------------------
The portfolio of the Fund is managed actively in pursuit of its
investment objective. Securities are not traded for short-term profits but, when
circumstances warrant, securities are sold, without regard to the length of time
held. A 50% annual turnover rate would occur, for example, if half of the
securities in the Fund=s portfolio (excluding short-term obligations) were
replaced once in a period of one year. For the fiscal years ended October 31,
1997 and 1998, the portfolio turnover rate was 37% and 104%, respectively. 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 turnover rate increases.

In effecting securities transactions for the Fund, the Investment
Adviser seeks to obtain the best price and execution of orders. In selecting
brokers, 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.

For the fiscal years ended October 31, 1996, 1997 and 1998, the
aggregate commissions paid by the Fund were $91,075, $53,347 and $134,991,
respectively. 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 Corporation uses Brown Brothers Harriman & Co. as one of the Fund's
principal brokers where, in the judgment of the Investment Adviser, such firm is
able to obtain a price and execution at least as favorable as prices and
executions provided by other qualified brokers. As one of the Fund's principal
brokers, Brown Brothers Harriman & Co. receives brokerage commissions from the
Fund.

The use of Brown Brothers Harriman & Co. as a broker for the Fund is
subject to the provisions of Rule 11a2-2(T) under the Securities Exchange Act of
1934 which permits the Corporation 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 Fund 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 Investment Adviser may direct a portion of the Fund=s securities
transactions to certain unaffiliated brokers which in turn use a portion of the
commissions they receive from the Fund to pay other unaffiliated service
providers on behalf of the Fund for services provided for which the Fund would
otherwise be obligated to pay. Such commissions paid by the Fund 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 Fund in the purchase and sale of portfolio securities when, in the judgment
of the Investment Adviser, that firm is able to obtain a price and execution at
least as favorable as other qualified brokers. As one of the principal brokers
of the Fund, Brown Brothers Harriman & Co. receives brokerage commissions from
the Fund.

On those occasions when Brown Brothers Harriman & Co. deems the
purchase or sale of a security to be in the best interests of the Fund as well
as other customers, Brown Brothers Harriman & Co., to the extent permitted by
applicable laws and regulations, may, but is not obligated to, aggregate the
securities to be sold or purchased for the Fund with those to be sold or
purchased for other customers in order to obtain best execution, including lower
brokerage commissions, if appropriate. In such event, allocation of the
securities so purchased or sold as well as any expenses incurred in the
transaction are made by Brown Brothers Harriman & Co. in the manner it considers
to be most equitable and consistent with its fiduciary obligations to its
customers, including the Fund. In some instances, this procedure might adversely
affect the Fund

A committee of non-interested Directors from time to time reviews,
among other things, information relating to the commissions charged by Brown
Brothers Harriman & Co. to the Fund 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 Fund are reviewed and approved no
less often than annually by a majority of the non-interested Directors.

For the fiscal years ended October 31, 1996, 1997 and 1998, total
transactions with a principal value of $43,947,413, $33,214,259 and $41,655,899,
were effected for the Fund of which transactions with a principal value of
$20,646,719, $13,199,626 and $13,199,801, were effected by Brown Brothers
Harriman & Co. which involved payments of commissions to Brown Brothers Harriman
& Co. of $50,078, $21,916 and $61,145, respectively.

A portion of the transactions for the Fund 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 Fund. The Investment Adviser
believes that the value of research services received is not determinable nor
does such research significantly reduce its expenses. The Corporation does not
reduce the fee paid by the Fund to the Investment Adviser by any amount that
might be attributable to the value of such services.

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 Directors of the Corporation review regularly the reasonableness of
commissions and other transaction costs incurred for the Fund 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.

Miscellaneous

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 Corporation 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 Corporation 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
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 Corporation 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.

ADDITIONAL INFORMATION
- ---------------------------------------------------------------
As used in this Statement of Additional Information and the Prospectus,
the term "majority of the Fund's outstanding voting securities" (as defined in
the 1940 Act) currently means the vote of (i) 67% or more of the Fund's shares
present at a meeting, if the holders of more than 50% of the Fund's outstanding
voting securities are present in person or represented by proxy; or (ii) more
than 50% of the Fund's outstanding voting securities, whichever is less.

Fund shareholders receive semi-annual reports containing unaudited
financial statements and annual reports containing financial statements audited
by independent auditors.

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.

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.

FINANCIAL STATEMENTS
- ---------------------------------------------------------------
The Annual Report of the Fund dated October 31, 1998 has been filed
with the Securities and Exchange Commission pursuant to Section 30(b) of the
1940 Act and Rule 30b2-1 thereunder and is hereby incorporated herein by
reference. A copy of the Annual Report which contains performance information
will be provided, without charge, to each person receiving this Statement of
Additional Information.

WS5462C
<PAGE>
- -------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION

THE 59 WALL STREET INFLATION-INDEXED SECURITIES FUND
21 Milk Street, Boston, Massachusetts 02109

- -------------------------------------------------------------------
The 59 Wall Street Inflation-Indexed Securities Fund (the
"Inflation-Indexed Securities Fund" or 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 Inflation-Indexed Securities Fund is designed to enable
investors to be invested in a portfolio of securities that are structured to
provide protection against inflation. The Inflation-Indexed Securities Fund's
investment objective is to provide investors with a high level of current income
consistent with minimizing price fluctuations in net asset value and maintaining
liquidity. There can be no assurance that the investment objective of the Fund
will be achieved.

Table of Contents
<S> <C> <C>

Cross-Reference to
Page Page in Prospectus

Investments
Investment Objective and Policies . . . . . . . . . 3 3-4
Investment Restrictions . . . . . . . . . . . . . . 12
Management
Directors and Officers . . . . . . . . . . . . . . . 15
Investment Adviser . . . . . . . . . . . . . . . . . 19 7
Administrator . . . . . . . . . . . . . . . . . . . 21
Distributor . . . . . . . . . . . . . . . . . . . . 22
Shareholder Servicing Agent,
Financial Intermediaries and Eligible Institutions . .23
Expense Payment Agreement 24
Custodian, Transfer and Dividend Disbursing Agent 25
Independent Auditors 25
Net Asset Value; Redemption in Kind . . . . . . . . 25 7
Computation of Performance . . . . . . . . . . . . . 26
Purchases and Redemptions 28
Federal Taxes . . . . . . . . . . . . . . . . . . . 30
</TABLE>

<PAGE>

Table of Contents

Page

Description of Shares . . . . . . . . . . . . . . . 32
Portfolio Brokerage Transactions . . . . . . . . . . 34
Note Ratings . . . . . . . . . . . . . . . . . . . . 35
Additional Information . . . . . . . . . . . . . . . 36
Financial Statements . . . . . . . . . . . . . . . . 36

The date of this Statement of Additional Information is
March 1, 1999.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES
- -----------------------------------------------------------------

The following supplements the information contained in the Prospectus
concerning the investment objective, policies and techniques of the Fund.

The U.S. Treasury has issued Inflation-Indexed Securities ("IIS") as
five-year, ten-year and thirty-year maturities. The U.S. Treasury has announced
its intention to issue additional securities with a term to maturity as long as
30 years. U.S. Government agencies, foreign governments and corporate issuers
have also issued these types of securities. IIS may be "stripped" of their
interest and principal components and purchased as separate instruments.

U.S. Treasury IIS provide for semi-annual payments of interest and a
payment of principal at maturity. Each interest payment will be adjusted up or
down to take into account any inflation or deflation that occurs between the
issue date of the security and the interest payment date. The principal amount
of a U.S. Treasury IIS will be adjusted up at maturity to take into account the
inflation that occurred between the issue date of the security and its maturity
date. The repayment of principal will never be less than the original face or
par amount of the security at issuance. All inflation adjustments will be based
on changes in the non-seasonally adjusted U.S. City Averages All Items Consumer
Price Index for All Urban Consumers, which is published monthly by the index as
reported for the third preceding month. Each semi-annual payment of interest
will be determined by multiplying a single fixed semi-annual payment of interest
by the inflation-adjusted principal amount of the security for the date of the
interest payment. Thus, although the interest rate will be fixed, the amount of
each interest payment will vary with the changes in the adjusted principal of
the security. These securities trade for purchases and sales with a daily
inflation adjustment to their par amount.

The inflation adjustment and the coupon interest on recently issued IIS
result in a yield that approximates the nominal yield available on similar
maturity U.S. Treasury securities, however this may or may not be true in the
future depending on the market's projection of future inflation rates versus
current inflation rates.

The calculation of the inflation index ratio for IIS issued by the U.S.
Treasury incorporates an approximate three-month lag, which may have an effect
on the trading price of the securities, particularly during periods of
significant, rapid changes in the inflation index. To the extent that inflation
has increase the three months prior to an interest payment, that interest
payment will not be protected from the inflation increase. Further, to the
extent that inflation has increased during the final three months of a
security's maturity, the final value of the security will not be protected
against that increase, which will negatively impact the value of the security.
Additionally, there is disagreement among financial market professionals as to
whether the Consumer Price Index actually reflects the true rate of inflation.
If the market perceives that the adjustment mechanism of the IIS does not
accurately adjust for inflation, the value of the IIS could be adversely
affected. In the event of sustained deflation, the amount of the semi-annual
interest payments, the inflation-adjusted principal of the security and the
value of any stripped components will decrease.

The Investment Adviser currently believes that the market for IIS will
be sufficient to permit the Fund to pursue its investment objective. However,
should the market for IIS issued by the U.S. Treasury and other issuers prove
less active than anticipated by the Investment Adviser, the Investment Adviser
is authorized to treat such an environment as an abnormal market condition. This
means that the Investment Adviser may purchase other types of securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities, in
excess of 35% of the Fund's total assets.

In response to adverse market, economic, political or other conditions,
the Investment Adviser may make temporary investments for the Fund that are not
consistent with the Fund's investment objective and principal investment
strategies of the Fund. Such investments may prevent the Fund from achieving its
investment objective.

Equity Investments

Hedging Strategies

Options on Fixed Income Securities. 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 fixed
income securities may be purchased for the Fund. Also subject to applicable laws
and regulations and as a hedge against changes in the market value of portfolio
securities or securities intended to be purchased, but also to enhance the
income of the Fund, options on fixed income securities may be written for the
Fund. A call option on fixed income securities gives the purchaser of the option
the right to buy the underlying securities 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 securities 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.

The effectiveness of purchasing options on fixed income securities as a
hedging technique depends upon the extent to which price movements in the
portion of the securities portfolio of the Fund being hedged correlate with
price movements of the fixed income securities selected. The value of these
options depends upon future movements in the level of interest rates as
reflected in the price of the underlying fixed income securities before the
expiration of the option. Accordingly, the successful use of options on fixed
income securities for the Fund is subject to the Investment Adviser=s ability to
select appropriate underlying fixed income securities and to predict future
interest rate movements over the short term in the overall market. Brokerage
costs are incurred in the purchase of options on fixed income securities and the
incorrect choice of underlying fixed income securities or an incorrect
assessment of future interest rate movements may result in poorer overall
performance than if such an option had not been purchased.

The Corporation intends to write (sell) covered put and call options on
optionable fixed income securities on behalf of the Fund. Call options written
by the Corporation give the holder the right to buy the underlying securities
during the term of the option at a stated exercise price; put options give the
holder the right to sell the underlying security to the Fund during the term of
the option at a stated exercise price. Call options are covered, for example,
when the Fund owns the underlying securities, and put options are covered, for
example, when the Fund has established a segregated account of cash and U.S.
Government securities which can be liquidated promptly to satisfy any obligation
to purchase the underlying securities. The Corporation may also write straddles
(combinations of puts and calls on the same underlying security) on behalf of
the Fund.

The Fund receives a premium from writing a put or call option, which
increases the Fund=s gross income in the event the option expires unexercised or
is closed out at a profit. The amount of the premium reflects, among other
things, the relationship of the market price of the underlying security to the
exercise price of the option and the remaining term of the option. By writing a
call option, the Corporation limits the opportunity of the Fund to profit from
any increase in the market value of the underlying security above the exercise
price of the option. By writing a put option, the Corporation assumes the risk
that it may be required to purchase the underlying security for an exercise
price higher than its then current market value, resulting in a potential
capital loss unless the security subsequently appreciates in value.

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 Fixed Income Securities. 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 fixed income securities (AFutures Contracts@) may be entered into for the
Fund, although the current intention is not to do so in such a manner that more
than 5% of the Fund=s net assets would be at risk. For the same purpose, put and
call options on interest rate futures contracts may be entered into for the
Fund.

In order to assure that the Fund is not deemed a Acommodity pool@ for
purposes of the Commodity Exchange Act, regulations of the Commodity Futures
Trading Commission (ACFTC@) require that the Fund enters 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 Fund=s
assets.

Futures Contracts are used to hedge against anticipated future changes in
interest rates which otherwise might either adversely affect the value of
securities held for the Fund or adversely affect the prices of securities which
are intended to be purchased at a later date for the Fund. 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 for the Fund would rise in value by an
amount which approximately offsets the decline in value of the portion of the
investment 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 to which price movements in the portion of the
securities portfolio being hedged correlate with price movements of the fixed
income securities selected. The value of a Futures Contract depends upon future
movements in the price of the fixed income securities before the closing out of
the Futures Contract. Accordingly, the successful use of Futures Contracts for
the Fund is subject to the Investment Adviser=s ability both to select
appropriate fixed income securities and to predict future price movements over
the short term in those securities. The incorrect choice of fixed income
securities or an incorrect assessment of future price movements over the short
term in those securities may result in 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 Fund enters into a Futures Contract, it may be initially required
to deposit with the custodian, in a segregated account in the name of the broker
performing the transaction, an "initial margin" of cash, U.S. Government
securities or other high grade short-term 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
termination of the Futures Contract. The margin deposits made are marked to
market daily and the Fund 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, interest rate Futures Contracts can be purchased on debt
securities such as U.S. Treasury bills and bonds, U.S. Treasury notes with
maturities between 61/2 to 10 years, GNMA certificates and bank certificates of
deposit. As a purchaser of an interest rate Futures Contract, the Fund incurs an
obligation to take delivery of a specified amount of the obligation underlying
the contract at a specified time in the future for a specified price. As a
seller of an interest rate Futures Contract, the Fund incurs an obligation to
deliver the specified amount of the underlying obligation at a specified time in
return for an agreed upon price.

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.

Another risk which may arise in employing Futures Contracts to protect
against the price volatility of portfolio securities is that the prices of
securities subject to Futures Contracts (and thereby the Futures Contract
prices) may correlate imperfectly with the behavior of the cash prices of the
Fund=s portfolio securities. Another such risk is that the price of the Futures
Contract may not move in tandem with the change in prevailing interest rates
against which the Fund seeks a hedge. An interest rate correlation may be
distorted by the fact that the futures market is dominated by short-term traders
seeking to profit from the difference between a contract or security price
objective and their cost of borrowed funds. Such distortions are generally minor
and would diminish as the contract approached maturity.

Over-the-counter (OTC) options purchased are treated as not readily
marketable.

Forward Exchange Contracts

Foreign exchange contracts are made with currency dealers, usually large
commercial banks and financial institutions. Although foreign exchange rates are
volatile, foreign exchange markets are generally liquid with the equivalent of
approximately $500 billion traded worldwide on a typical day.

While the Portfolio may enter into foreign currency exchange transactions
to reduce the risk of loss due to a decline in the value of the hedged currency,
these transactions also tend to limit the potential for gain. Forward foreign
exchange contracts do not eliminate fluctuations in the prices of the
Portfolio's securities or in foreign exchange rates, or prevent loss if the
prices of these securities should decline. The precise matching of the forward
contract amounts and the value of the securities involved is not generally
possible because the future value of such securities in foreign currencies
changes as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly unlikely.

The Investment Adviser, on behalf of the Fund, enters into forward foreign
exchange contracts in order to protect the dollar value of all investments in
IIS denominated in foreign currencies. The precise matching of the forward
contract amounts and the value of the securities involved is not always possible
because the future value of such securities in foreign currencies changes as a
consequence of market movements in the value of such securities between the date
the forward contract is entered into and the date it matures.

Loans of Portfolio Securities

Loans up to 30% of the total value of the securities of the Fund are
permitted. Securities of the Fund may be loaned if such loans are secured
continuously by cash or equivalent collateral or by an irrevocable letter of
credit in favor of the Fund at least equal at all times to 100% of the market
value of the securities loaned plus accrued income. By lending securities, the
Fund=s income can be increased by its continuing to receive income on the loaned
securities as well as by the opportunity to receive income on the collateral.
All or any portion of interest earned on invested collateral may be paid to the
borrower. Loans are subject to termination by the Corporation in the normal
settlement time, currently three business days after notice, or by the borrower
on one day's notice. Borrowed securities are returned when the loan is
terminated. Any appreciation or depreciation in the market price of the borrowed
securities which occurs during the term of the loan inures to the Fund and its
shareholders. Reasonable finders' and custodial fees may be paid in connection
with a loan. In addition, all facts and circumstances, including the
creditworthiness of the borrowing financial institution, are considered before a
loan is made and no loan is made in excess of one year. There is the risk that a
borrowed security may not be returned to the Fund. Securities of the Fund are
not loaned to Brown Brothers Harriman & Co. or to any affiliate of the
Corporation or Brown Brothers Harriman & Co.

When-Issued and Delayed Delivery Securities

Securities may be purchased for the Fund on a when-issued or delayed
delivery basis. For example, delivery and payment may take place a month or more
after the date of the transaction. The purchase price and the interest rate
payable on the securities, if any, are fixed on the transaction date. The
securities so purchased are subject to market fluctuation and no income accrues
to the Fund until delivery and payment take place. At the time the commitment to
purchase securities for the Fund on a when-issued or delayed delivery basis is
made, the transaction is recorded and thereafter the value of such securities
are reflected each day in determining the Fund=s net asset value. At the time of
its acquisition, a when-issued or delayed delivery security may be valued at
less than the purchase price. 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 Fund could, as with the disposition of
any other portfolio obligation, incur a gain or loss due to market fluctuation.
When-issued or delayed delivery commitments for the Fund may not be entered into
if such commitments exceed in the aggregate 15% of the market value of the
Fund=s total assets, less liabilities other than the obligations created by
when-issued or delayed delivery commitments.

U.S. Government Securities

Assets of the Fund may be invested in securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities. These securities,
including those which are guaranteed by federal agencies or instrumentalities,
may or may not be backed by the full faith and credit of the United States. In
the case of securities not backed by the full faith and credit of the United
States, it may not be possible to assert a claim against the United States
itself in the event the agency or instrumentality issuing or guaranteeing the
security for ultimate repayment does not meet its commitments. Securities which
are not backed by the full faith and credit of the United States include, but
are not limited to, securities of the Tennessee Valley Authority, the Federal
National Mortgage Association (FNMA) and the U.S. Postal Service, each of which
has a limited right to borrow from the U.S. Treasury to meet its obligations,
and securities of the Federal Farm Credit System, the Federal Home Loan Banks,
the Federal Home Loan Mortgage Corporation (FHLMC) and the Student Loan
Marketing Association, the obligations of each of which may be satisfied only by
the individual credit of the issuing agency. Securities which are backed by the
full faith and credit of the United States include Treasury bills, Treasury
notes, Treasury bonds and pass through securities of the Government National
Mortgage Association (GNMA), the Farmers Home Administration and the
Export-Import Bank. There is no percentage limitation with respect to
investments in U.S. Government securities.

Mortgage-Backed Securities

Assets of the Fund also include mortgage-backed securities (MBS) which are
issued by, or are collateralized by securities guaranteed by, the U.S.
Government, its agencies or instrumentalities. These securities represent an
undivided interest in a pool of residential mortgages. These securities,
including those issued by GNMA, FNMA and FHLMC, provide investors with payments
consisting of both interest and principal as the mortgages in the underlying
pools are repaid. Unlike conventional bonds, MBS pay back principal over the
life of the MBS rather than at maturity. Thus, a holder of the MBS, such as the
Fund, would receive monthly scheduled payments of principal and interest and may
receive unscheduled principal prepayments representing payments on the
underlying mortgages. At the time the Fund reinvests the scheduled principal
payments and any unscheduled prepayment of principal that it receives, the Fund
may receive a rate of interest which is higher or lower than the rate of
interest paid on the existing MBS, thus affecting the yield of the Fund.

Asset-Backed Securities

Asset-backed securities represent interests in pools of loans (generally
unrelated to mortgage loans). Interest and principal payments ultimately depend
on payment of the underlying loans by individuals, although the securities may
be supported by letters of credit or other credit enhancements. The value of
asset-backed securities may also be affected by the creditworthiness of the
servicing agent for the loan pool, the originator of the loans or the financial
institution providing the credit enhancement.

Bank Obligations

Assets of the Fund may be invested in U.S. dollar-denominated negotiable
certificates of deposit, fixed time deposits and bankers acceptances of banks,
savings and loan associations and savings banks organized under the laws of the
United States or any state thereof, including obligations of non-U.S. branches
of such banks, or of non-U.S. banks or their U.S. or non-U.S. branches, provided
that in each case, such bank has more than $500 million in total assets, and has
an outstanding short-term debt issue rated within the highest rating category
for short-term debt obligations by at least two (unless only rated by one)
nationally recognized statistical rating organizations (e.g., Moody=s and S&P)
or, if unrated, are of comparable quality as determined by or under the
direction of the Board of Directors. See ACorporate Bond and Commercial Paper
Ratings@ in the Statement of Additional Information. There is no percentage
limitation with respect to investments in negotiable certificates of deposit,
fixed time deposits and bankers acceptances of U.S. branches of U.S. banks and
U.S. branches of non-U.S. banks that are subject to the same regulation as U.S.
banks. While early withdrawals are not contemplated, fixed time deposits are not
readily marketable and may be subject to early withdrawal penalties, which may
vary. Assets of the Fund are not invested in obligations of Brown Brothers
Harriman & Co., the Administrator, the Distributor, or in the obligations of the
affiliates of any such organization or in fixed time deposits with a maturity of
over seven calendar days, or in fixed time deposits with a maturity of from two
business days to seven calendar days if more than 10% of the Fund=s total assets
would be invested in such deposits.

Repurchase Agreements

Repurchase agreements may be entered into only with a primary dealer (as
designated by the Federal Reserve Bank of New York) in U.S. Government
obligations. This is an agreement in which the seller (the Lender) of a security
agrees to repurchase from the Fund the security sold at a mutually agreed upon
time and price. As such, it is viewed as the lending of money to the Lender. The
resale price normally is in excess of the purchase price, reflecting an agreed
upon interest rate. The rate is effective for the period of time assets of the
Fund are invested in the agreement and is not related to the coupon rate on the
underlying security. The period of these repurchase agreements is usually short,
from overnight to one week, and at no time are assets of the Fund invested in a
repurchase agreement with a maturity of more than one year. The securities which
are subject to repurchase agreements, however, may have maturity dates in excess
of one year from the effective date of the repurchase agreement. The Fund always
receives as collateral securities which are issued or guaranteed by the
U.S.Government, its agencies or instrumentalities. Collateral is marked to the
market daily and has a market value including accrued interest at least equal to
100% of the dollar amount invested on behalf of the Fund in each agreement along
with accrued interest. Payment for such securities is made for the Fund only
upon physical delivery or evidence of book entry transfer to the account of
State Street Bank and Trust Company, the Fund=s Custodian. If the Lender
defaults, the Fund might incur a loss if the value of the collateral securing
the repurchase agreement declines and might incur disposition costs in
connection with liquidating the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the Lender, realization upon the
collateral on behalf of the Fund may be delayed or limited in certain
circumstances. A repurchase agreement with more than seven days to maturity may
not be entered into for the Fund if, as a result, more than 10% of the market
value of the Fund=s total assets would be invested in such repurchase agreements
together with any other investment being held for the Fund for which market
quotations are not readily available.

Reverse Repurchase Agreements

Reverse repurchase agreements may be entered into only with a primary
dealer (as designated by the Federal Reserve Bank of New York) in U.S.Government
obligations. This is an agreement in which the Corporation agrees for the Fund
to repurchase securities sold by it at a mutually agreed upon time and price. As
such, it is viewed as the borrowing of money for the Fund. Proceeds of
borrowings under reverse repurchase agreements is invested for the Fund. This is
the speculative factor known as leverage. If interest rates rise during the term
of a reverse repurchase agreement utilized for leverage, the value of the
securities to be repurchased for the Fund as well as the value of securities
purchased with the proceeds will decline. Proceeds of a reverse repurchase
transaction are not invested for a period which exceeds the duration of the
reverse repurchase agreement. A reverse repurchase agreement may not be entered
into for the Fund if, as a result, more than one-third of the market value of
the Fund=s total assets, less liabilities other than the obligations created by
reverse repurchase agreements, would be engaged in reverse repurchase
agreements. In the event that such agreements exceed, in the aggregate,
one-third of such market value, the amount of the Fund=s obligations created by
reverse repurchase agreements will be reduced within three days thereafter (not
including weekends and holidays) or such longer period as the Securities and
Exchange Commission may prescribe, to an extent that such obligations will not
exceed, in the aggregate, one-third of the market value of the Fund=s assets, as
defined above. A segregated account with the Custodian is established and
maintained for the Fund with liquid assets in an amount at least equal to the
Fund=s purchase obligations under its reverse repurchase agreements. Such
segregated account consists of liquid assets marked to the market daily, with
additional liquid assets added when necessary to insure that at all times the
value of such account is equal to the purchase obligations.

INVESTMENT RESTRICTIONS

- -----------------------------------------------------------------

The Fund is operated under the following investment restrictions which
are deemed fundamental policies and may be changed only with the approval of the
holders of a "majority of the Fund's outstanding voting securities" (as defined
in the 1940 Act). (See "Additional Information".)

Except that the 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, the Corporation, with respect to the Fund, may
not:

(1) borrow money or mortgage or hypothecate its assets, except that in an amount
not to exceed 1/3 of the current value of its net assets, it may borrow money as
a temporary measure for extraordinary or emergency purposes, and 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 while
effecting an orderly liquidation of portfolio securities or to maintain
liquidity in the event of an unanticipated failure to complete a portfolio
security transaction or other similar situations) or, reverse repurchase
agreements, 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;

(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 or the purchase, ownership, holding, sale or writing
of options;

(3) underwrite securities issued by other persons except insofar as it may
technically be deemed an underwriter under the Securities Act of 1933, as
amended in selling a portfolio security;

(4) 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 (5) 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 is part of an
issue to the public shall not be considered the making of a loan;

(5) 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);

(6) enter into reverse repurchase agreements which, including any borrowings
described in paragraph (1), exceed, in the aggregate, one-third of the market
value of the Fund's total assets, less liabilities other than obligations
created by reverse repurchase agreements. In the event that such agreements
exceed, in the aggregate, one-third of such market value, it will, within three
days thereafter (not including weekends and holidays) or such longer period as
the Securities and Exchange Commission may prescribe, reduce the amount of the
obligations created by reverse repurchase agreements to an extent that such
obligations will not exceed, in the aggregate, one-third of the market value of
its assets;

(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;

(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;

(11) invest more than 5% of its total assets in the securities or obligations of
any one issuer (other than obligations issued by the U.S. Government, its
agencies or instrumentalities); provided, however, that up to 25% of its total
assets may be invested without regard to this restriction;

(12) purchase more than 10% of all outstanding debt obligations of any one
issuer (other than obligations issued by the U.S. Government, its agencies or
instrumentalities).

Non-Fundamental Restrictions. The Fund may not 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): (i) purchase securities of any investment company
if such purchase at the time thereof would cause more than 10% of its total
assets (taken at the greater of cost or market value) to be invested in the
securities of such issuers or would cause more than 3% of the outstanding voting
securities of any such issuer to be held for it; (ii) invest more than 10% of
its net assets (taken at the greater of cost or market value) in restricted
securities; or (iii) invest less than 65% of the value of the total assets of
the Fund in securities that are structured to provide protection against
inflation. These policies are not fundamental and may be changed without
shareholder approval.

The Fund is classified as diversified under the 1940 Act, which means
that at least 75% of the total assets is represented by cash; securities issued
by the U.S. Government, its agencies or instrumentalities; and other securities
limited in respect to any one issuer to an amount not greater in value than 5%
of the Fund=s total assets. The Fund does not purchase more than 10% of all
outstanding debt obligations of any one issuer (other than obligations issued by
the U.S. Government, its agencies or instrumentalities).

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.

DIRECTORS AND OFFICERS

- -----------------------------------------------------------------

The Directors, in addition to supervising the actions of the
Administrator, Investment Adviser and Distributor of the Fund, as set forth
below, decide upon matters of general policy. Because of the services rendered
by the Investment Adviser and the Administrator, the Corporation itself requires
no employees other than its officers, none of whom, other than the Chairman,
receive compensation from the Fund and all of whom, other than the Chairman, are
employed by 59 Wall Street Administrators.

The Directors and executive officers of the Corporation, 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

JV 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
Associates, Inc.; Director of Flowers Industries, Inc.(1) His business address
is Shields & Company, 140 Broadway, New York, NY 10005.

<PAGE>

OFFICERS OF THE CORPORATION

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; Senior Vice President and Secretary of
SFG; Secretary of 59 Wall Street Distributors and 59 Wall Street Administrators.

MOLLY S. MUGLER -- Assistant Secretary; Vice President 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; Vice President of SFG
(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 because of
his affiliation with a registered broker-dealer.

*These Directors are members of the Audit Committee 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, 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 services company, a merchant bank, and a venture
capital partnership, respectively.

Except for Mr. Shields, no Director is an "interested person" of the
Corporation as that term is defined in the 1940 Act.

Directors of the Corporation

Compensation
Pension or from the
Retirement Corporation
Aggregate Benefits Accrued Estimated Annual and Fund
Name of Person, Compensation as Part of Benefits upon Complex*Paid
Position from the Corp. Fund Expenses Retirement to Directors

J.V. Shields, Jr., $12,450 none none $31,000
Director

Eugene P. Beard, $11,337 none none 26,000
Director

David P. Feldman, $11,337 none none 26,000
Director

Alan G. Lowy, $11,337 none none 26,000
Director

Arthur D. Miltenberger, $11,337 none none 26,000
Director
<FN>

* The Fund Complex consists of the Corporation and The 59 Wall Street Trust
which currently consists of four series.
</FN>
</TABLE>

As of January 31, 1999, the Corporation's Directors and officers as a
group beneficially owned less than 1% of the outstanding shares of the
Corporation. At the close of business on that date, no person, to the knowledge
of management, owned beneficially more than 5% of the outstanding shares of the
Fund except that the Catholic Charities Gift owned 117,814 (9.10%) shares of the
Fund and Mr. Richard Goeltz owned 261,618 (20.20%) shares of the Fund and BBH
Richard E. Stewart IRA owned 76,601 (5.91%) shares of the Fund. The address of
each of the above named is c/o Brown Brothers Harriman & Co., 59 Wall Street,
New York, New York 10005. As of that date, partners of Brown Brothers Harriman &
Co. and their immediate families owned an additional 1,165 (0.1%) shares of the
Fund. Also, Brown Brothers Harriman & Co. Employee Pension Plan on that date
held 16,476 (1.4%) shares of the Fund. Brown Brothers Harriman & Co. and its
affiliates separately are able to direct the disposition of an additional
195,714 (17.0%) shares of the Fund, as to which shares Brown Brothers Harriman &
Co. disclaims beneficial ownership.

INVESTMENT ADVISER

- -----------------------------------------------------------------

Under an Investment Advisory Agreement with the Corporation, subject to
the general supervision of the Corporation's Directors and in conformance with
the stated policies of the Fund, Brown Brothers Harriman & Co. provides
investment advice and portfolio management services to the Fund. In this regard,
it is the responsibility of Brown Brothers Harriman & Co. to make the day-to-day
investment decisions for the Fund, to place the purchase and sale orders for
portfolio transactions of the Fund , and to manage, generally, the investments
of the Fund.

The Investment Advisory Agreement between Brown Brothers Harriman & Co.
and the Corporation is dated December 15, 1993 and remains in effect for two
years from such date and thereafter, but only as long as the agreement is
specifically approved at least annually (i) by a vote of the holders of a
"majority of the Fund's outstanding voting securities" (as defined in the 1940
Act) or by the Corporation's Directors, and (ii) by a vote of a majority of the
Directors of the Corporation who are not parties to the Investment Advisory
Agreement or "interested persons" (as defined in the 1940 Act) of the
Corporation ("Independent Directors") 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 Directors on November 10, 1998. The
Investment Advisory Agreement terminates automatically if assigned and is
terminable 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 Fund's
outstanding voting securities" (as defined in the 1940 Act) on 60 days' written
notice to Brown Brothers Harriman & Co. and by Brown Brothers Harriman & Co. on
90 days' written notice to the Corporation. (See "Additional Information".)

The investment advisory fee paid to the Investment Adviser is
calculated daily and paid monthly at an annual rate equal to 0.25% of the Fund's
average daily net assets. Prior to February 28, 1997, the Adviser received from
the Fund a fee accrued daily, and paid monthly at an annual rate equal to 0.40%
of the Fund's average daily net assets, on an annualized basis for the Fund's
then-current fiscal year. For the fiscal years ended October 31, 1996, 1997, and
1998, the Fund incurred $46,266, $44,539 and $30,843, respectively, for advisory
services.

The investment advisory services of Brown Brothers Harriman & Co. to
the Fund are not exclusive under the terms of the Investment Advisory Agreement.
Brown Brothers Harriman & Co. is free to and does render investment advisory
services to others, including other registered investment companies.

Pursuant to a license agreement between the Corporation and Brown
Brothers Harriman & Co. dated September 5, 1990, as amended as of December 15,
1993, the Corporation may continue to use in its name 59 Wall Street, the
current and historic address of Brown Brothers Harriman & Co. The agreement may
be terminated by Brown Brothers Harriman & Co. at any time upon written notice
to the Corporation upon the expiration or earlier termination of any investment
advisory agreement between the Corporation or any investment company in which a
series of the Corporation invests all of its assets and Brown Brothers Harriman
& Co. Termination of the agreement would require the Corporation to change its
name and the name of the Fund to eliminate all reference to 59 Wall Street.

Pursuant to license agreements between Brown Brothers Harriman & Co.
and each of 59 Wall Street Administrators and 59 Wall Street Distributors (each
a Licensee), dated June 22, 1993 and June 8, 1990, respectively, each Licensee
may continue to use in its name 59 Wall Street, the current and historic address
of Brown Brothers Harriman & Co., only if Brown Brothers Harriman & Co. does not
terminate the respective license agreement, which would require the Licensee to
change its name to eliminate all reference to 59 Wall Street.

ADMINISTRATOR

- -------------------------------------------------------------------

Brown Brothers Harriman & Co. acts as Administrator for the Corporation.

In its capacity as Administrator, Brown Brothers Harriman & Co. administers
all aspects of the Corporation's operations subject to the supervision of the
Corporation's Directors except as set forth below under "Distributor". In
connection with its responsibilities as Administrator and at its own expense,
Brown Brothers Harriman & Co. (i) provides the Corporation with the services of
persons competent to perform such supervisory, administrative and clerical
functions as are necessary in order to provide effective administration of the
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 Custodian, Transfer and Dividend
Disbursing Agent; (iii) provides the Corporation with adequate office space and
communications and other facilities; and (iv) prepares and/or arranges for the
preparation, but does not pay for, the periodic updating of the Corporation's
registration statement and 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 the Fund's shareholders and the Securities and Exchange Commission.

The Administration Agreement between the Corporation and Brown Brothers
Harriman & Co. (dated November 1, 1993) will remain in effect for two years from
such date and thereafter, but only so long as such agreement is specifically
approved at least annually in the same manner as the Investment Advisory
Agreement (see "Investment Adviser"). The Independent Directors most recently
approved the Corporation's Administration Agreement on November 10, 1998. The
agreement will terminate automatically if assigned by either party thereto and
is terminable at any time without penalty by a vote of a majority of the
Directors of the Corporation or by a vote of the holders of a "majority of the
Corporation's outstanding voting securities" (as defined in the 1940 Act). (See
"Additional Information"). The 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. and by Brown Brothers Harriman &
Co. on 90 days' written notice to the Corporation. The administrative fee
payable to Brown Brothers Harriman & Co. from the Fund is calculated daily and
payable monthly at an annual rate equal to 0.15% of the Fund's average daily net
assets. For the fiscal years ended October 31, 1996, 1997, and 1998 the Fund
incurred $17,350, $17,260 and $12,337, respectively, for administrative
services.
Pursuant to a Subadministrative Services Agreement with Brown Brothers
Harriman & Co., 59 Wall Street Administrators performs such subadministrative
duties for the Corporation as are from time to time agreed upon by the parties.
The offices of 59 Wall Street Administrators are located at 21 Milk Street,
Boston, Massachusetts 02109. 59 Wall Street Administrators is a wholly-owned
subsidiary of Signature Financial Group, Inc. (ASFG@). 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.

DISTRIBUTOR
- -----------------------------------------------------------------

59 Wall Street Distributors acts as exclusive Distributor of shares of
the Fund. Its office is located at 21 Milk Street, Boston, Massachusetts 02109.
59 Wall Street Distributors is a wholly-owned subsidiary of SFG. SFG and its
affiliates currently provide administration and distribution services for other
registered investment companies. The Corporation pays for the preparation,
printing and filing of copies of the Corporation=s registration statements and
the Fund's prospectus as required under federal and state securities laws.

59 Wall Street Distributors holds itself available to receive purchase
orders for Fund shares.

<PAGE>

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 Corporation with respect to 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 Fund=s average daily net assets
represented by shares owned during the period for which payment was being made
by shareholders who did not hold their account 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
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.

<PAGE>

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 customer=s 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 Fund=s average daily net assets represented by shares owned
during the period for which payment was being made by customers for whom the
financial institution was the holder or agent of record.

EXPENSE PAYMENT AGREEMENT
- -----------------------------------------------------------------
Under an expense payment agreement, 59 Wall Street Administrators pays the
Fund=s expenses (see AExpense Table@ in the Prospectus), other than fees paid to
Brown Brothers Harriman & Co. under the Corporation=s Administration Agreement
and other than expenses relating to the organization of the Fund. In return, 59
Wall Street Administrators receives a fee from the Fund such that after such
payment the aggregate expenses of the Fund do not exceed an agreed upon annual
rate, currently 0.65% of the average daily net assets of the Fund. Prior to
March 1, 1997, under an agreement dated February 22, 1995, 59 Wall Street
Administrators received a fee from the Fund such that after such payment the
aggregate expenses of the Fund did not exceed an agreed upon annual rate of
0.85% of the average daily net assets of the Fund. Such fees are computed daily
and paid monthly. During the fiscal year ended October 31, 1998, 59 Wall Street
Administrators incurred $141,797 in expenses, including investment advisory fees
of $30,843 and shareholder servicing/eligible institution fees of $30,843 on
behalf of the Fund.

The expense payment agreement will terminate on July 1, 2000. If there had
been no expense payment agreement, the Directors of the Corporation estimate
that, at the Fund's current level, the total operating expenses of the Fund may
increase to approximately 1.24% of the average annual net assets of the Fund.

The expenses of the Fund paid by 59 Wall Street Administrators under the
agreement include the shareholder servicing/eligible institution fees, the
compensation of the Directors of the Corporation; governmental fees; interest
charges; taxes; membership dues in the Investment Company Institute allocable to
the Fund; fees and expenses of independent auditors, of legal counsel and of any
transfer agent, custodian, registrar or dividend disbursing agent of the Fund;
insurance premiums; expenses of calculating the net asset value of shares of the
Fund; expenses of preparing, printing and mailing prospectuses, reports,
notices, proxy statements and reports to shareholders and to governmental
officers and commissions; expenses of shareholder meetings; expenses relating to
the issuance, registration and qualification of shares of the Fund; and expenses
connected with the execution, recording and settlement of portfolio security
transactions; and the expenses associated with the investment advisory
agreement.

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
- -------------------------------------------------------------------
State Street Bank and Trust Company ("State Street" or the "Custodian"),
225 Franklin Street, P.O. Box 351, Boston, Massachusetts 02110, is Custodian,
Transfer and Dividend Disbursing Agent for the Fund.

As Custodian, it is responsible for maintaining books and records of the
Fund's portfolio transactions and holding the Fund's portfolio securities and
cash pursuant to a custodian agreement with the Corporation. Cash is held for
the Fund in demand deposit accounts at the Custodian. Subject to the supervision
of the Administrator, the Custodian maintains the Fund's accounting and
portfolio transaction records and for each day computes the Fund's net asset
value. As Transfer and Dividend Disbursing Agent it is responsible for
maintaining the books and records detailing the ownership of the Fund's shares.

INDEPENDENT AUDITORS

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Deloitte & Touche LLP are the independent auditors for the Fund.

NET ASSET VALUE; REDEMPTION IN KIND

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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 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.) The determination of net asset value per share
is made once during each such day as of the close of regular trading on such
Exchange by subtracting from the value of the Fund's total assets the amount of
its liabilities, and dividing the difference by the number of shares of the Fund
outstanding at the time the determination is made.

COMPUTATION OF PERFORMANCE

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The average annual total rate of 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 average annual total rate of return for the Fund for the period
July 23, 1992 (commencement of operations) to October 31, 1998 was 4.75%. The
average annual total rate of return for the Fund for the fiscal year ended
October 31, 1998 was 4.98%. The average annual total rate of return for the Fund
for the five-year period ended October 31, 1998 was 4.18%.

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 Fund and the Fund'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.

Any "yield" quotation of the Fund consists of an annualized historical
yield, carried at least to the nearest hundredth of one percent, based on a
30-day or one-month period and is calculated by (a) raising to the sixth power
the sum of 1 plus the quotient obtained by dividing the Fund's net investment
income earned during the period by the product of the average daily number of
shares outstanding during the period that were entitled to receive dividends and
the maximum offering price per share on the last day of the period, (b)
subtracting 1 from the result, and (c) multiplying the result by 2.

The yield should not be considered a representation of the yield of the
Fund in the future since the yield is not fixed. Actual yields depend on the
type, quality and maturities of the investments held by the Fund, changes in
interest rates on investments, and the Fund's expenses during the period.

Yield information may be useful for reviewing the performance of the
Fund and for providing a basis for comparison with other investment
alternatives. However, unlike bank deposits or other investments which pay a
fixed yield for a stated period of time, the Fund's yield does fluctuate, and
this should be considered when reviewing performance or making comparisons.

The Fund=s 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 Salomon Brothers Inflation-Linked Securities Index,
Donoghue=s Money Fund Index and Shearson Lehman Intermediate Bond) 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.

The Fund=s yield and effective yield may be used from time to time in
shareholder reports or other communications to shareholders or prospective
investors. Both yield figures are based on historical earnings and are not
intended to indicate future performance. The yield of the Fund refers to the
projected income generated by an investment in the Fund over a 30-day or
one-month period (which period is stated). This income is then annualized. The
effective yield is calculated similarly but, when annualized, the income earned
by an investment in the Fund is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.

PURCHASES AND REDEMPTIONS

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A confirmation of each purchase and redemption transaction is issued on
execution of that transaction.

The Corporation reserves the right to discontinue, alter or limit the
automatic reinvestment privilege at any time, but will provide shareholders
prior written notice of any such discontinuance, alteration or limitation.

A shareholder=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 or
holidays or when regular trading on such Exchange is restricted as determined by
the Securities and Exchange Commission by rule or regulation, (ii) during
periods in which an emergency exists which causes disposal of, or evaluation of,
the net asset value of the Fund=s portfolio securities to be unreasonable or
impracticable, or (iii) for such other periods as the Securities and Exchange
Commission may permit.

An investor should be aware that redemptions from the Fund may not be
processed if a completed account application with a certified taxpayer
identification number has not been received.

In the event a shareholder redeems all shares held in the Fund, future
purchases of shares of the Fund by such shareholder would be subject to the
Fund=s minimum initial purchase requirements.

FEDERAL TAXES

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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 (the "Code"). Accordingly,
the Fund is not subject to federal income taxes on its net income and realized
net long-term capital gains that are distributed to its shareholders. A 4%
non-deductible excise tax is imposed on the Fund to the extent that certain
distribution requirements for the Fund for each calendar year are not met. The
Corporation intends to meet such requirements. Under Subchapter M of the Code
the Fund is not subject to federal income taxes on amounts distributed to
shareholders.

During periods of rising interest rates, the Investment Adviser may have to
dispose of securities under disadvantageous circumstances in order to generate
cash to satisfy the Fund's distribution requirements. Generally, an
inflation-adjusted increase in principal is required to be included as income in
the year the increase occurs even though the investor will not receive payment
of amounts equal to such increase until the security matures. During periods of
rising interest rates, the Fund will be required to accrue an increasing amount
of inflation-adjusted income. The Fund will be required to distribute dividends
equal to substantially all of its net investment income, including the daily
accretion of inflation adjustments accrued by the Fund with respect to IIS for
which the Fund receives no payments in cash prior to their maturity.

Return of Capital. 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
shares is reduced below a shareholder's cost as a result of a dividend or
capital gains distribution by 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 would be treated as long-term
capital gain or loss if the shares have been held for more than one year, and
otherwise as short-term capital gain or loss. However, any loss realized by a
shareholder upon the redemption of Fund shares held one year or less is treated
as a long-term capital loss to the extent of any long-term capital gains
distributions received by the shareholder with respect to such shares.
Additionally, any loss realized on a redemption or exchange of Fund shares is
disallowed to the extent the shares disposed of are replaced within a period of
61 days beginning 30 days before such disposition, such as pursuant to
reinvestment of a dividend or capital gains distribution in Fund shares.

Other Taxes. The Fund may be subject to state or local taxes in jurisdictions in
which it is deemed to be doing business. In addition, the treatment of the Fund
and its shareholders in those states which have income tax laws might differ
from treatment under the federal income tax laws. Shareholders should consult
their own tax advisors with respect to any state or local taxes.

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.

DESCRIPTION OF SHARES

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The Corporation is an open-end management investment company organized as a
Maryland corporation on July 16, 1990. Its offices are located at 21 Milk
Street, Boston, Massachusetts 02109; 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 $0.001 per share, of which
25,000,000 shares have been classified as shares of The 59 Wall Street
Inflation-Indexed Securities Fund. The Board of Directors also has the power to
designate one or more series of shares of common stock and to classify and
reclassify any unissued shares with respect to such series. Currently there are
six such series in addition to the Fund.

Shareholders of the Fund are entitled to a full vote for each full share
held and to a fractional vote for fractional shares. 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 or as may be required by
the 1940 Act or as my be permitted by the Articles of Incorporation or By-laws.
Shareholders have under certain circumstances (e.g., upon application and
submission of certain specified documents to the Directors by a specified number
of shareholders) the right to communicate with other shareholders in connection
with requesting a meeting of shareholders for the purpose of removing one or
more Directors. Shareholders also have the right to remove one or more Directors
without a meeting by a declaration in writing by a specified number of
shareholders. Shares have no preemptive or conversion rights. The rights of
redemption are described in the Prospectus. Shares are fully paid and
non-assessable by the Corporation.

Stock certificates are not issued by the Corporation.

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 shareholders of the Fund, except as otherwise required by applicable
law. The By-laws further provide that all questions shall be decided by a
majority of the votes cast at any such meeting at which a quorum is present,
except as otherwise required by applicable law.

The Corporation's Articles of Incorporation provide that, at any meeting of
shareholders of 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 Articles of Incorporation and the By-Laws of the Corporation provide
that the Corporation indemnify the Directors and officers of the Corporation to
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.

The Corporation may, in the future, seek to achieve the Fund's investment
objective by investing all of the Fund's investable assets in a no-load,
diversified, open-end management investment company having substantially the
same investment objective as the Fund. Shareholders will receive 30 days prior
written notice with respect to any such investment. In such event, the Fund
would no longer directly require investment advisory services and therefore
would pay no investment advisory fees. Further, the administrative services fee
paid from the Fund would be reduced. At a shareholder's meeting held on
September 23, 1993, the Fund's shareholders approved changes to the investment
restrictions of the Fund to authorize such an investment. Such an investment
would be made only if the Directors believe that the aggregate per share
expenses of the Fund and such other investment company would be less than or
approximately equal to the expenses which the Fund would incur if the
Corporation were to continue to retain the services of an investment adviser for
the Fund and the assets of the Fund were to continue to be invested directly in
portfolio securities.

PORTFOLIO BROKERAGE TRANSACTIONS

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The securities in which the Fund invests are traded primarily in the
over-the-counter markets on a net basis and do not normally involve either
brokerage commissions or transfer taxes. Where possible transactions on behalf
of the Fund are entered directly with the issuer or from an underwriter or
market maker for the securities involved. Purchases from underwriters of
securities may include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers may include a
spread between the bid and asked price. The policy of the Fund regarding
purchases and sales of securities is that primary consideration is given to
obtaining the most favorable prices and efficient executions of transactions. In
seeking to implement the Fund's policies, the Investment Adviser effects
transactions with those brokers and dealers who the Investment Adviser believes
provide the most favorable prices and are capable of providing efficient
executions. While reasonably competitive spreads or commissions are sought for
the Fund, it will not necessarily be paying the lowest spread or commission
available. If the Investment Adviser believes such prices and executions are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or Investment Adviser. Such services may
include, but are not limited to, any one or more of the following: information
as to the availability of securities for purchase or sale; statistical or
factual information or opinions pertaining to investment; wire services; and
appraisals or evaluations of portfolio securities. For the fiscal year ended
October 31, 1997 and 1998, the portfolio turnover rate for the Fund was 372% and
305%, respectively. 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.

On those occasions when Brown Brothers Harriman & Co. deems the
purchase or sale of a security to be in the best interests of the Fund as well
as other customers, Brown Brothers Harriman & Co. to the extent permitted by
applicable laws and regulations, may, but is not obligated to, aggregate the
securities to be sold or purchased for the Fund with those to be sold or
purchased for other customers in order to obtain best execution, including lower
brokerage commissions, if appropriate. In such event, allocation of the
securities so purchased or sold as well as any expenses incurred in the
transaction are made by Brown Brothers Harriman & Co. in the manner it considers
to be most equitable and consistent with its fiduciary obligations to its
customers, including the Fund. In some instances, this procedure might adversely
affect the Fund.

NOTE RATINGS

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Notes rated MIG-1 by Moody's are judged to be of the best quality,
enjoying strong protection from established cash flow of funds for their
services or from established and broad-based access to the market for
refinancing or both. Notes rated MIG-2 are judged to be of high quality with
ample margins of protection, though not as large as MIG-1. The commercial paper
rating Prime-1 is the highest commercial paper rating assigned by Moody's and
denotes that the issuer has superior capacity for repayment. Among the factors
considered by Moody's in assigning note and commercial paper ratings are the
following: (i) evaluation of the management of the issuer; (ii) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (iii) evaluation
of the issuer's products in relation to competition and customer acceptance;
(iv) liquidity; (v) amount and quality of long-term debt; (vi) trend of earnings
over a period of 10 years; (vii) financial strength of a parent company and the
relationships which exist with the issuer; and (viii) recognition by management
of obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations.

With respect to notes, an SP-1 rating indicates a very strong or strong
capacity to pay principal and interest. Issues determined to possess
overwhelming safety characteristics are given a plus (+) designation. SP-2
denotes a satisfactory capacity to pay principal and interest. The commercial
paper rating A-1 is the highest paper rating assigned by Standard & Poor's and
indicates a strong degree of safety regarding timely payments. Issues determined
to possess overwhelming safety characteristics are given a plus (+) designation.
Among the factors considered by Standard & Poor's in assigning bond, note and
commercial paper ratings are the following: (i) trend of earnings and cash flow
with allowances made for unusual circumstances, (ii) stability of the issuer's
industry, (iii) the issuer's relative strength and position within the industry
and (iv) the reliability and quality of management.

ADDITIONAL INFORMATION

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As used in this Statement of Additional Information and the Prospectus,
the term "majority of the Fund's outstanding voting securities" (as defined in
the 1940 Act) currently means the vote of (i) 67% or more of the Fund's shares
present at a meeting, if the holders of more than 50% of the Fund's outstanding
voting securities are present in person or represented by proxy; or (ii) more
than 50% of the Fund's outstanding voting securities, whichever is less.

Fund shareholders receive semi-annual reports containing unaudited
financial statements and annual reports containing financial statements audited
by independent auditors.

FINANCIAL STATEMENTS

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The Annual Report of the Fund dated October 31, 1998 has been filed
with the Securities and Exchange Commission pursuant to Section 30(b) of the
1940 Act and Rule 30b2-1 thereunder and is hereby incorporated herein by
reference. A copy of the Annual Report which also contains performance
information will be provided, without charge, to each person receiving this
Statement of Additional Information.

WS5463C