As filed with the Securities and Exchange Commission on January 11, 1999
Registration Nos. 33-48605 and 811-06139
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 20
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 43
THE 59 WALL STREET FUND, INC.
(Exact Name of Registrant as Specified in Charter)
21 Milk Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (617) 423-0800
Philip W. Coolidge
21 Milk Street, Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copy to:
John E. Baumgardner, Jr., Esq.
Sullivan & Cromwell
125 Broad Street, New York, New York 10004
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] on pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
(par value $.001)
<PAGE>
PROSPECTUS
The 59 Wall Street European Equity Fund
The 59 Wall Street Pacific Basin Equity Fund
The 59 Wall Street International Equity Fund
The European Equity Fund, the Pacific Basin Equity Fund and the
International Equity Fund are separate portfolios of The 59 Wall Street Fund,
Inc. Shares of each Fund are offered by this Prospectus. The European Equity
Fund and the Pacific Basin Equity Fund are each designed to enable investors to
participate in the opportunities available in foreign equity markets. The
International Equity Fund is designed to enable investors to participate in the
opportunities available in equity markets outside the United States and Canada.
The International Equity Fund invests all of its assets in the
International Equity Portfolio. Brown Brothers Harriman & Co. is the Investment
Adviser for the European Equity Fund, the Pacific Basin Equity Fund and the
International Equity Portfolio. Shares of each Fund are offered at net asset
value without a sales charge.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February 26, 1999.
<PAGE>
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of each Fund and the Portfolio is to provide
investors with long-term maximization of total return, primarily through capital
appreciation.
Under normal circumstances the Investment Adviser fully invests the
assets of the European Equity Fund in equity securities of companies based in
the European Economic Community (Germany, France, Italy, United Kingdom, Spain,
Netherlands, Belgium, Denmark, Greece, Portugal, Ireland, Luxembourg), as well
as Switzerland, Austria, Norway, Sweden, Finland, Turkey, the Czech Republic,
Slovakia, Hungary, Poland and Romania.
Under normal circumstances the Investment Adviser fully invests the
assets of the Pacific Basin Equity Fund in equity securities of companies based
in Pacific Basin countries, including Japan, Hong Kong, Australia, Malaysia,
Singapore, South Korea, Taiwan, Thailand, India, Philippines, Indonesia, New
Zealand, China, Pakistan, Sri Lanka and Bangladesh.
Under normal circumstances the Investment Adviser fully invests the
assets of the International Equity Portfolio in equity securities of companies
based outside the United States and Canada in the developed markets of the
world. These markets include Japan, United Kingdom, Germany, France, Hong Kong,
Netherlands, Switzerland, Malaysia, Australia, Singapore, Italy, Sweden, Spain,
Belgium, Denmark, Finland, Norway, Portugal, New Zealand, Austria and Ireland.
Although the Investment Adviser expects to invest the assets of the
European Equity Fund, the Pacific Basin Equity Fund and the International Equity
Portfolio primarily in common stocks, it may also purchase other securities with
equity characteristics, including securities convertible into common stock,
rights and warrants. The Investment Adviser may purchase these equity securities
directly or in the form of American Depositary Receipts, Global Depositary
Receipts or other similar securities representing securities of foreign-based
companies. Although the Investment Adviser invests primarily in equity
securities which are traded on foreign or domestic national securities
exchanges, the Investment Adviser may also purchase equity securities which are
traded in foreign or domestic over-the-counter markets. The Investment Adviser
may invest in securities of appropriate investment companies in order to obtain
participation in markets or market sectors which restrict foreign investment or
to obtain more favorable investment terms.
The Investment Adviser allocates the investments of the European Equity
Fund, the Pacific Basin Equity Fund and the International Equity Portfolio among
various countries based upon the economic environment, liquidity conditions,
valuation levels, expected earnings growth, government policies and political
stability. In response to changes or anticipated changes in these criteria, the
Investment Adviser increases, decreases or eliminates a particular country's
representation. As a result of applying these criteria the Investment Adviser
allocates assets among countries in a manner which does not reflect the relative
size or valuation of a country's capital market or a country's relative gross
domestic product or population.
In constructing the portfolio of securities of the European Equity
Fund, the Pacific Basin Equity Fund and the International Equity Portfolio, the
Investment Adviser places emphasis on the equity securities of larger companies
with strong longer term fundamentals such as leading industry position,
effective management, competitive products and services, high or improving
return on investment and a sound financial structure. The Investment Adviser
selects individual equities through a disciplined process which systematically
evaluates growth expectations relative to price levels.
Because the Investment Adviser buys and sells securities denominated in
currencies other than the U.S. dollar, and interest, dividends and sale proceeds
are received in currencies other than the U.S. dollar, the Investment Adviser
enters into foreign currency exchange transactions from time to time to convert
to and from different foreign currencies and to convert foreign currencies to
and from the U.S. dollar.
The Investment Adviser may enter into forward foreign exchange
contracts in order to protect the dollar value of securities denominated in
foreign currencies that are held or intended to be purchased.
In response to adverse market, economic, political or other conditions,
the Investment Adviser may make
2
<PAGE>
temporary investments for the European Equity Fund, the Pacific Basin Equity
Fund or the International Equity Portfolio that are not consistent with its
investment objective and principal investment strategies.
Other mutual funds or institutional investors may invest in the
International Equity Portfolio on the same terms and conditions as the
International Equity Fund. However, these other investors may have different
operating expenses which may generate different aggregate performance results.
The Corporation may withdraw that Fund's investment in that Portfolio at any
time as a result of changes in that Portfolio's investment objective, policies
or restrictions or if the Board of Directors determines that it is otherwise in
the best interests of that Fund to do so.
3
<PAGE>
PRINCIPAL RISK FACTORS
The principal risks of investing in the Funds and the Portfolio and the
circumstances reasonably likely to adversely affect an investment are described
below. As with any fund other than a money market mutual fund, the share price
of each Fund changes daily based on market conditions and other factors. A
shareholder may lose money by investing in the Funds.
The principal risks of investing in the Funds are:
o Market Risk:
This is the risk that the price of a security will rise or fall due to
changing economic, political or market conditions, or due to a company's
individual situation.
o Foreign Investments:
Investing in equity securities of foreign-based companies involves risks
not typically associated with investing in equity securities of companies
organized and operated in the United States.
Changes in political or social conditions, diplomatic relations,
confiscatory taxation, expropriation, nationalization, limitation on the removal
of funds or assets, or imposition of (or change in) exchange control or tax
regulations may adversely affect the value of such investments. Changes in
government administrations or economic or monetary policies in the United States
or abroad could result in appreciation or depreciation of portfolio securities
and could favorably or unfavorably affect the operations of the European Equity
Fund, the Pacific Basin Equity Fund or the International Equity Portfolio. The
economies of individual foreign nations differ from the U.S. economy, whether
favorably or unfavorably, in areas such as growth of gross domestic product,
rate of inflation, capital reinvestment, resource self-sufficiency and balance
of payments position. It may be more difficult to obtain and enforce a judgment
against a foreign company. Dividends and interest paid by foreign issuers may be
subject to withholding and other foreign taxes which may decrease the net return
on foreign investments as compared to dividends and interest paid to other funds
by domestic companies.
In general, less information is publicly available with respect to
foreign-based companies than is available with respect to U.S. companies. Most
foreign-based companies are also not subject to the uniform accounting and
financial reporting requirements applicable to companies based in the United
States.
In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of the New York Stock Exchange. Accordingly, foreign investments are
less liquid and their prices are more volatile than comparable investments in
securities of U.S. companies. Moreover, the settlement periods for foreign
securities, which are often longer than those for securities of U.S. companies,
may affect portfolio liquidity. In buying and selling securities on foreign
exchanges, fixed commissions are normally paid that are generally higher than
the negotiated commissions charged in the United States. In addition, there is
generally less government supervision and regulation of securities exchanges,
brokers and companies in foreign countries than in the United States.
The foreign investments made by the Investment Adviser are in compliance
with the currency regulations and tax laws of the United States and foreign
governments. There may also be foreign government regulations and laws which
restrict the amounts and types of foreign investments.
Because foreign securities generally are denominated and pay dividends or
interest in foreign currencies, and the European Equity Fund, the Pacific Basin
Equity Fund and the International Equity Portfolio hold various foreign
currencies from time to time, the value of their respective net assets as
measured in U.S. dollars is affected favorably or unfavorably by changes in
exchange rates. The European Equity Fund, the Pacific Basin Equity Fund and the
International Equity Portfolio also incur costs in connection with conversion
between various currencies.
4
<PAGE>
o Eastern Europe and Developing Countries:
The Investment Adviser may invest the assets of the European Equity Fund
in securities of issuers based in Eastern Europe and in developing countries.
The Investment Adviser may invest a substantial portion of the assets of the
Pacific Basin Equity Fund in the securities of issuers based in developing
countries. Investments in securities of issuers in developing countries may
involve a high degree of risk and many may be considered speculative. These
investments carry all of the risks of investing in securities of foreign issuers
outlined in this section to a heightened degree. These heightened risks include
(i) greater risks of expropriation, confiscatory taxation, nationalization, and
less social, political and economic stability; (ii) the small current size of
the markets for securities of issuers in developing countries and the currently
low or non-existent volume of trading, resulting in lack of liquidity and in
price volatility; (iii) certain national policies which may restrict the Funds'
investment opportunities including restrictions on investing in issuers or
industries deemed sensitive to relevant national interests; and (iv) the absence
of developed legal structures governing private or foreign investment and
private property.
o Forward Exchange Contracts:
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.
o Diversification Risk:
Each Fund and the Portfolio are classified as "non-diversified", which
means that each is limited with respect to the portion of its assets which may
be invested in securities of a single issuer only by certain requirements of
federal tax law. The possible assumption of large positions in the securities of
a small number of issuers may cause performance to fluctuate to a greater extent
than that of a diversified investment company as a result of changes in the
financial condition or in the market's assessment of the issuers. o Investments
in the Funds are neither insured nor guaranteed by the U.S. Government. Shares
of the Funds are not deposits or obligations of, or guaranteed by, Brown
Brothers Harriman & Co. or any other bank, and the shares are not insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board or any other
federal, state or other governmental agency.
5
<PAGE>
FUND PERFORMANCE
The charts and tables below give an indication of the Funds' risks and
performance. The charts show changes in the Funds' performance from year to
year. The tables show how the Funds' average annual returns for the periods
indicated compare to those of a broad measure of market performance.
When you consider this information, please remember that a Fund's
performance in past years is not necessarily an indication of how that Fund will
do in the future.
[The following table was depicted as bar chart in the printed material]
EUROPEAN EQUITY FUND
Total Return (% per calendar year)
1991 9.25%
1992 7.53%
1993 27.12%
1994 -3.93%
1995 16.49%
1996 19.25%
1997 15.28%
1998 []%
Highest and Lowest Return
(Quarterly 1991-1998)
Quarter Ending Quarter Ending
Highest [ ]% [ ]
Lowest [ ]% [ ]
Average Annual Total Returns
(through December 31, 1998)
1 Year 5 Years Life of Fund
(Since 10/31/90)
European Equity Fund [ ] [ ] [ ]
MSCI-Europe [ ] [ ] [ ]*
* (Since [ ])
6
<PAGE>
[The following table was depicted as bar chart in the printed material]
PACIFIC BASIN EQUITY FUND
Total Return (% per calendar year)
1993 74.90%
1994 -21.50%
1995 3.49%
1996 -0.71%
1997 -20.13%
1998 []%
Highest and Lowest Return
(Quarterly 1993-1998)
Quarter Ending
Highest [ ]% [ ]
Lowest [ ]% [ ]
Average Annual Total Returns
(through December 31, 1998)
1 Year 5 Years Life of Fund
(Since 10/31/90)
Pacific Basin Equity Fund [ ] [ ] [ ]
MSCI-Pacific [ ] [ ] [ ]*
* (Since [ ])
7
<PAGE>
[The following table was depicted as bar chart in the printed material]
INTERNATIONAL EQUITY FUND
Total Return (% per calendar year)
1996 8.05%
1997 1.05%
1998 []%
Highest and Lowest Return
(Quarterly 1996-1998)
Quarter Ending
Highest [ ]% [ ]
Lowest [ ]% [ ]
Average Annual Total Returns
(through December 31, 1998)
1 Year Life of Fund
(Since 4/1/95)
International Equity Fund [ ] [ ]*
MSCI-EAFE [ ] [ ]*
* (Since [ ])
Historical performance information for the fund for any period or portion
thereof prior to its commencement of operations, is that of the Portfolio as
adjusted to reflect all fees and expenses of the Fund.
8
<PAGE>
FEES AND EXPENSES OF THE FUNDS
The tables below describe the fees and expenses that an investor may pay
if that investor buys and holds shares of the Funds. The expenses shown for the
International Equity Fund include the expenses of the International Equity
Portfolio.
<TABLE>
<CAPTION>
SHAREHOLDER FEES
(Fees paid directly from an investor's account)
<S> <C> <C> <C>
European Pacific Basin International
Equity Fund Equity Fund Equity Fund
Maximum Sales Charge (Load) None None None
Imposed on Purchases
Maximum Deferred Sales Charge (Load) None None None
Maximum Sales Charge (Load) None None None
Imposed on Reinvested Dividends
Redemption Fee None None None
Exchange Fee None None None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(Expenses that are deducted from Fund assets as a percentage of average net assets)
<S> <C> <C> <C>
European Pacific Basin International
Equity Fund Equity Fund Equity Fund
Management Fees 0.65% 0.65% 0.65%
Distribution (12b-1) Fees None None None
Other Expenses
Administration Fee 0.15% 0.15% 0.16%
Shareholder Servicing/Eligible Institution Fee 0.25 0.25 0.25
Other Expenses 0.27 0.67 0.14 0.54 0.57 0.98
------ ------ ------ ----- ----- -----
Total Operating Expenses Paid by Fund 1.32% 1.19% 1.63%
Expenses Paid by Commission/Expense
Offset Arrangements 0.04 0.07 0.00
------ ----- -----
Total Annual Fund Operating Expenses 1.36% 1.26% 1.63%
====== ===== =====
<FN>
The Actual Total Annual Fund Operating Expenses of the International
Equity Fund and the International Equity Portfolio are 1.50%. This is a result
of an expense payment arrangement under which 59 Wall Street Administrators pays
that Fund's expenses, other than administration fees and expenses relating to
the organization of that Fund. These arrangements will continue until October
31, 2000.
</FN>
</TABLE>
9
<PAGE>
EXAMPLE
This example is intended to help an investor compare the cost of investing
in the Funds to the cost of investing in other mutual funds. The example assumes
that an investor invests $10,000 in a Fund for the time periods indicated and
then sells all of his shares at the end of those periods. The example also
assumes that an investment has a 5% return each year and that the Funds'
operating expenses remain the same as shown in the table above. Although actual
costs and the return on an investor's investment may be higher or lower, based
on these assumptions the investor's costs would be:
European Pacific Basin International
Equity Fund Equity Fund Equity Fund
1 year [ ] [ ] [ ]
3 years [ ] [ ] [ ]
5 years [ ] [ ] [ ]
10 years [ ] [ ] [ ]
The example above reflects the expenses of both the International Equity
Fund and the International Equity Portfolio.
10
<PAGE>
INVESTMENT ADVISER
The Investment Adviser to the European Equity Fund, the Pacific Basin
Equity Fund and the International Equity Portfolio is Brown Brothers Harriman &
Co., Private Bankers, a New York limited partnership established in 1818. The
firm is subject to examination and regulation by the Superintendent of Banks of
the State of New York and by the Department of Banking of the Commonwealth of
Pennsylvania. The firm is also subject to supervision and examination by the
Commissioner of Banks of the Commonwealth of Massachusetts. The Investment
Adviser is located at 59 Wall Street, New York, NY 10005.
The Investment Adviser provides investment advice and portfolio management
services to the European Equity Fund, the Pacific Basin Equity Fund and the
International Equity Portfolio. Subject to the general supervision of the
Corporation's Directors, the Investment Adviser makes the day-to-day investment
decisions for each such Fund, places the purchase and sale orders for the
portfolio transactions of each such Fund, and generally manages each such Fund's
investments. Subject to the general supervision of the Trustees of the
Portfolio, the Investment Adviser makes the day-to-day investment decisions for
the Portfolio, places the purchase and sale orders for the portfolio
transactions of the Portfolio, and generally manages the Portfolio's
investments. The Investment Adviser provides a broad range of investment
management services for customers in the United States and abroad. At June 30,
1998, it managed total assets of approximately $[25] billion.
A team of individuals manages each Fund's portfolio on a day-to-day
basis. This team includes Mr. John A. Nielsen, Ms. Camille M. Kelleher, Mr. A.
Edward Allinson, Mr. G. Scott Clemons, Mr. Paul J. Fraker and Mr. Ben Kottler.
Mr. Nielsen holds a B.A. from Bucknell University, a M.B.A. from Columbia
University and is a Chartered Financial Analyst. He joined Brown Brothers
Harriman & Co. in 1968. Ms. Kelleher holds a B.A. from Barnard College and a
M.B.A. from Columbia University. She joined Brown Brothers Harriman & Co. in
1984. Mr. Allinson holds a B.A. and a M.B.A. from the University of Pennsylvania
and is a Chartered Financial Analyst. He joined Brown Brothers Harriman & Co. in
1991. Mr. Clemons holds a A.B. from Princeton University and is a Chartered
Financial Analyst. He joined Brown Brothers Harriman & Co. in 1990. Mr Fraker
holds a B.A. from Carleton College and a M.A. from Johns Hopkins University. He
joined Brown Brothers Harriman & Co. in 1996. Mr. Kottler holds a B.A. from
Durham University and is a Chartered Financial Analyst. He joined Brown Brothers
Harriman & Co. in 1996.
As compensation for the services rendered and related expenses such as
salaries of advisory personnel borne by the Investment Adviser under the
Investment Advisory Agreements, the European Equity Fund, the Pacific Basin
Equity Fund and the International Equity Portfolio each pays the Investment
Adviser an annual fee, computed daily and payable monthly, equal to 0.65% of its
average daily net assets.
SHAREHOLDER INFORMATION
NET ASSET VALUE
The Corporation determines each Fund's net asset value per share once
daily at 4:00 P.M., New York time on each day the New York Stock Exchange is
open for regular trading.
The Corporation values the assets in each Fund's portfolio on the basis of
their market or other fair value. The Portfolio values its assets on the basis
of their market or other fair value.
PURCHASE OF SHARES
The Corporation offers shares of each Fund on a continuous basis at their
net asset value without a sales charge. The Corporation reserves the right to
determine the purchase orders for Fund shares that it will accept. Investors may
purchase shares on any day the net asset value is calculated if the Corporation
receives the
10
<PAGE>
purchase order and acceptable payment for such order prior to such calculation.
The Corporation then executes purchases of Fund shares at the net asset value
per share next determined on that same day. Shares are entitled to dividends
declared, if any, starting as of the first business day following the day the
Corporation executes the purchase order on the books of the Corporation.
An investor who has an account with an Eligible Institution or a Financial
Intermediary may place purchase orders for Fund shares through that Eligible
Institution or Financial Intermediary which holds such shares in its name on
behalf of that customer pursuant to arrangements made between that customer and
that Eligible Institution or Financial Intermediary. Each Eligible Institution
and each Financial Intermediary may establish and amend from time to time a
minimum initial and a minimum subsequent purchase requirement for its customers.
Currently, such minimum purchase requirements range from $500 to $5,000. Each
Eligible Institution or Financial Intermediary arranges payment for Fund shares
on behalf of its customers. An Eligible Institution or a Financial Intermediary
may charge a transaction fee on the purchase of Fund shares.
An investor who does not have an account with an Eligible Institution or a
Financial Intermediary must place purchase orders for Fund shares with the
Corporation through Brown Brothers Harriman & Co., the Funds' Shareholder
Servicing Agent. Such an investor has such shares held directly in the
investor's name on the books of the Corporation and is responsible for arranging
for the payment of the purchase price of Fund shares. The Corporation executes
all purchase orders for initial and subsequent purchases at the net asset value
per share next determined after the Corporation's custodian, State Street Bank
and Trust Company, has received payment in the form of a cashier's check drawn
on a U.S. bank, a check certified by a U.S. bank or a wire transfer. The
Shareholder Servicing Agent has established a minimum initial purchase
requirement for each Fund of $100,000 and a minimum subsequent purchase
requirement for each Fund of $25,000. The Shareholder Servicing Agent may amend
these minimum purchase requirements from time to time.
REDEMPTION OF SHARES
If the Corporation receives a redemption request prior to the net asset
value determination on that day, the Corporation will execute such a redemption
at the net asset value per share then determined. Shares continue to earn
dividends declared, if any, through the business day that the Corporation
executes the redemption request on the books of the Corporation.
Shareholders must redeem shares held by an Eligible Institution or a
Financial Intermediary on behalf of such shareholder pursuant to arrangements
made between that shareholder and that Eligible Institution or Financial
Intermediary. The Corporation pays proceeds of a redemption to that
shareholder's account at that Eligible Institution or Financial Intermediary on
a date established by the Eligible Institution or Financial Intermediary. An
Eligible Institution or a Financial Intermediary may charge a transaction fee on
the redemption of Fund shares.
Shareholders may redeem shares held directly in the name of a shareholder
on the books of the Corporation by submitting a redemption request in good order
to the Corporation through the Shareholder Servicing Agent. The Corporation pays
proceeds resulting from such redemption directly to the shareholder generally on
the next business day after the redemption request is executed, and in any event
within seven days.
Redemptions by the Corporation
The Shareholder Servicing Agent has established a minimum account size of
$25,000, which may be amended from time to time. If the value of a shareholder's
holdings in a Fund falls below that amount because of a redemption of shares,
the Corporation may redeem the shareholder's remaining shares. If such remaining
shares are to be redeemed, the Corporation notifies the shareholder and allows
the shareholder 60 days to make an additional investment to meet the minimum
requirement before the redemption is processed. Each
10
<PAGE>
Eligible Institution and each Financial Intermediary may establish and amend
from time to time for their respective customers a minimum account size, each of
which is currently lower than that established by the Shareholder Servicing
Agent.
Further Redemption Information
Redemptions of shares are taxable events on which a shareholder may
realize a gain or a loss. The Corporation has reserved the right to pay the
amount of a redemption from a Fund, either totally or partially, by a
distribution in kind of securities (instead of cash) from that Fund. The
Corporation may suspend a shareholder's right to receive payment with respect to
any redemption or postpone the payment of the redemption proceeds for up to
seven days and for such other periods as applicable law may permit.
DIVIDENDS AND DISTRIBUTIONS
The Corporation declares and pays to shareholders substantially all of
each Fund's net income and realized net short-term capital gains at least
annually as a dividend, and substantially all of each Fund's realized net
long-term capital gains annually as a capital gains distribution. The
Corporation may make an additional dividend and/or capital gains distribution in
a given year to the extent necessary to avoid the imposition of federal excise
tax on a Fund. The Corporation pays dividends and capital gains distributions to
shareholders of record on the record date. The International Equity Fund's net
income and realized net capital gains include that Fund's pro rata share of the
Portfolio's net income and realized net capital gains.
Unless a shareholder whose shares are held directly in the shareholder's
name on the books of the Corporation elects to have dividends and capital gains
distributions paid in cash, the Corporation automatically reinvests dividends
and capital gains distributions in additional Fund shares without reference to
the minimum subsequent purchase requirement.
Each Eligible Institution and each Financial Intermediary may establish
its own policy with respect to the reinvestment of dividends and capital gains
distributions in additional Fund shares.
TAXES
Dividends are taxable to shareholders of a Fund as ordinary income,
whether such dividends are paid in cash or reinvested in additional shares.
Capital gains may be taxable at different rates depending on the length of time
a Fund or the Portfolio holds its assets. Capital gains distributions are
taxable to shareholders as long-term capital gains, whether paid in cash or
reinvested in additional shares and regardless of the length of time a
particular shareholder has held Fund shares.
Foreign Investors
Each Fund is designed for investors who are either citizens of the United
States or aliens subject to United States income tax. Prospective investors who
are not citizens of the United States and who are not aliens subject to United
States income tax are subject to United States withholding tax on the entire
amount of all dividends. Therefore, such investors should not invest in a Fund
since alternative investments are available which would not be subject to United
States withholding tax.
13
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help an investor understand
the Funds' financial performance for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned on an investment in
each Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Deloitte & Touche LLP, whose report, along with
the Funds' financial statements, are included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
EUROPEAN EQUITY FUND
For the years ended October 31
- -------------------------------------- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
Net asset value, beginning of year...........$38.02 $35.02 $31.95 $31.82 $31.17
Income from investment operations:
Net investment income .......................0.42 0.39 0.38(1) 0.45 0.39
Net gains or losses on securities
(both realized and unrealized)...............6.06 5.29 4.08 2.09 1.80
Total from investment operations 6.48 5.68 4.46 2.54 2.19
------------ ------------ ------------- -------------- -------------
Distributions:
Dividends (from net investment income) (0.31) (0.41) - -- (0.25)
Distributions (from capital gains) .......(5.14) ( 2.27) (1.39) (2.41) (1.29)
Total Distributions .........................(5.45) (2.68) (1.39) (2.41) (1.54)
Net asset value, end of period ..............$39.05 $38.02 $35.02 $31.95 $31.82
============ ============ ============= ============== =============
Total return ................................19.34% 17.28% 14.63% 9.42% 7.35%
Ratios/Supplemental Data:
Net assets, end of year (000's omitted) .$155,557 $154,179 $146,350 $116,95 5 $110,632
Ratio of expenses to average net assets 1.21% 1.36%(2) 1.33%(2) 1.43%(2) 1.37%
Ratio of net income to average net
assets .....................................0.60% 1.02% 1.16% 1.55% 1.30%
Portfolio turnover rate ......................56% 82% 42% 72% 124%
Average commission rate paid per share $0.0446 $0.0062 $0.0212 $0.0216 --
<FN>
(1) Calculated using average shares outstanding for the year.
(2) Ratio reflects fees paid with brokerage commission (years ended October 31,
1995, 1996 and 1997) and fees reduced in connection with certain offset
arrangements (years ended October 31, 1996, 1997 and 1998).
</FN>
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
PACIFIC BASIN EQUITY FUND
For the years ended October 31
- ---------------------------------------- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
Net asset value, beginning of year.............$24.52 $30.19 $29.88 $39.85 $39.87
Income from investment operations:
Net investment income........................(0.20) 0.00(1)(2) 0.051(1) 0.11 0.14
Net gains or losses on securities
(both realized and unrealized) ..............(2.39) (4.69) 1.62 (4.50) 1.26
Total from investment operations (2.59) (4.69) 1.67 (4.39) 1.40
------------ ----------- ------------ ------------- -------------
Distributions:
Dividends (from net investment income)......(0.52) (0.00) (0.86) (0.00)2 (0.14)
Distributions (from capital gains) ......... -- (0.28) -- (5.58) (1.28)
Returns of capital .........................(1.10) (0.70) (0.50) -- --
Total Distributions ...........................(1.62) (0.98) (1.36) (5.58) 1.42
Net asset value, end of period ................$20.31 $24.52 $30.19 $29.88 $39.85
============ =========== ============ ============= =============
Total return.................................(10.78)% (16.03)% 5.65% (10.62)% 3.48%
Ratios/Supplemental Data:
Net assets, end of year (000's omitted) ..$32,630 $102,306 $150,685 $114,932 $120,469
Ratio of expenses to average net assets(3)...1.62% 1.26% 1.30% 1.43% 1.29%
Ratio of net income to average net
assets ....................................(0.73%) 0.00%(2) 0.16% 0.53% 0.39%
Portfolio turnover rate .......................91% 63% 58% 82% 86%
<FN>
(1) Calculated using average shares outstanding for the year.
(2) Less than $0.01 per share.
(3) Ratio reflects fees paid with brokerage commission (years ended October 31,
1995, 1996 and 1997) and fees reduced in connection with certain offset
arrangements (years ended October 31, 1996, 1997 and 1998).
</FN>
</TABLE>
15
<PAGE>
<TABLE>
INTERNATIONAL EQUITY FUND
<S> <C> <C>
For the year For the period from June 6, 1997
ended October 31, (commencement of operations) to
1998 October 31, 1997
Net asset value, beginning of year................. $9.42 $10.00
Income from investment operations:
Net investment income ................................ 0.001 0.001
Net gains or losses on securities
(both realized and unrealized)...................... 0.75 (0.58)
Total from investment operations 0.75 (0.58)
------------------- -----------------------------------------
Distributions:
Dividends (from net investment income) .... -- --
Distributions (from capital gains) ................ (0.05) --
Returns of capital ...................................(0.03) --
Total Distributions .....................................(0.08) --
------------------- -----------------------------------------
Net asset value, end of period ...................... $10.09 $9.42
=================== =========================================
Total return .............................. 8.06% (5.80)%(2)
Ratios/Supplemental Data:
Net assets, end of year (000's omitted) ....... $27,475 $7,040
Ratio of expenses to average net assets .... 1.50% 1.36%(3)(4)
Ratio of net income to average net assets .. (0.15)% (0.06)%(3)
<FN>
(1) Less than $0.01
(2) Not annualized
(3) Annualized
(4) Includes the Fund's share of the Portfolio's expenses
</FN>
</TABLE>
16
<PAGE>
The 59 Wall Street
Pacific Basin Equity Fund
SEC file number: 811-06139
The 59 Wall Street
European Equity Fund
SEC file number: 811-06139
The 59 Wall Street
International Equity Fund
SEC file number: 811-06139
More information on the Funds is available free upon request, including the
following:
o Annual/Semiannual Report
Describes the Funds' performance, lists portfolio holdings and contains a
letter from the Funds' manager discussing recent market conditions, economic
trends and Fund strategies.
o Statement of Additional Information (SAI)
Provides more details about each Fund and its policies. A current SAI is
on file with the Securities and Exchange Commission (SEC) and is incorporated by
reference (is legally considered part of this prospectus).
To obtain information:
o By telephone
Call 1-800-625-5759
o By mail write to the Funds' Shareholder Servicing Agent:
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
o By E-mail send your request to:
info@ [ ]
o On the Internet:
Text-only versions of Fund documents can be viewed online or downloaded
from:
SEC
http://www.sec.gov
The 59 Wall Street Fund, Inc.
http://www. [ ]
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC 20549-6009
<PAGE>
European Equity Fund
Pacific Basin Equity Fund
International Equity Fund
PROSPECTUS
February 26, 1999
<PAGE>
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
THE 59 WALL STREET INTERNATIONAL EQUITY FUND
21 Milk Street, Boston, Massachusetts
02109
===============================================================================
The 59 Wall Street International Equity Fund (the Fund") is a separate
portfolio of The 59 Wall Street Fund, Inc. (the "Corporation"), a management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Fund is designed to enable investors to
participate in the opportunities available in equity markets outside the United
States and Canada. The investment objective of the Fund is to provide investors
with long-term maximization of total return, primarily through capital
appreciation.
The Corporation seeks to achieve the investment objective of the Fund by
investing all of the Fund's assets in the International Equity Portfolio, an
open-end investment company having the same investment objective as the Fund.
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") for the Portfolio. This Statement of Additional Information is not a
prospectus and should be read in conjunction with the Prospectus dated February
26, 1999, a copy of which may be obtained from the Corporation at the address
noted above.
Table of Contents
Cross-Reference to
Page Page in Prospectus
Investments
Investment Objective and Policies . 2 5-8
Investment Restrictions . . . . 4
Management
Directors, Trustees and Officers . 6
Investment Adviser . . . . . . 10 11-12
Administrators. . . . . . . . 11
Distributor . . . . . . . . 12
Shareholder Servicing Agent,
Financial Intermediaries and
Eligible Institutions . . . . . . . . 13
Custodian, Transfer and
Dividend Disbursing Agent . . . . . .[]
Independent Auditors . . . . . . . . .[]
Net Asset Value; Redemption in Kind . . . 13 15
Computation of Performance . . . . . . 14
Purchases and Redemptions . . . . . . . . []
Federal Taxes . . . . . . . . . . 15
Description of Shares . . . . . . . 16
Portfolio Brokerage Transactions . . . . 17
Additional Information . . . . . . . . . . []
Financial Statements . . . . . . . 20
Appendix . . . . . . . . . . . . . . . . . []
The date of this Statement of Additional Information is February 26, 1999.
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
================================================================================
The following supplements the information contained in the
Prospectus concerning the investment objective, policies and techniques of the
Portfolio.
Equity Investments
Equity investments may or may not pay dividends and may or may not carry
voting rights. Common stock occupies the most junior position in a company's
capital structure. Convertible securities entitle the holder to exchange the
securities for a specified number of shares of common stock, usually of the same
company, at specified prices within a certain period of time and to receive
interest or dividends until the holder elects to convert. The provisions of any
convertible security determine its ranking in a company's capital structure. In
the case of subordinated convertible debentures, the holder's claims on assets
and earnings are subordinated to the claims of other creditors, and are senior
to the claims of preferred and common shareholders. In the case of convertible
preferred stock, the holder's claims on assets and earnings are subordinated to
the claims of all creditors and are senior to the claims of common shareholders.
Domestic Investments
The assets of the Portfolio are not invested in domestic securities (other
than short-term instruments), except temporarily when extraordinary
circumstances prevailing at the same time in a significant number of foreign
countries render investments in such countries inadvisable.
Hedging Strategies
Options on Stock. 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 stocks may be purchased for
the Portfolio, although the current intention is not to do so in such a manner
that more than 5% of the Portfolio's net assets would be at risk. A call option
on a stock gives the purchaser of the option the right to buy the underlying
stock at a fixed price at any time during the option period. Similarly, a put
option gives the purchaser of the option the right to sell the underlying stock
at a fixed price at any time during the option period. To liquidate a put or
call option position, a "closing sale transaction" may be made at any time prior
to the expiration of the option which involves selling the option previously
purchased.
Covered call options may also be sold (written) on stocks, although in each
case the current intention is not to do so. A call option is "covered" if the
writer owns the underlying security.
Options 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, put and call options on stock indexes may
be purchased for the Portfolio, although the current intention is not to do so
in
3
<PAGE>
such a manner that more than 5% of the Portfolio's net assets would be at risk.
A stock index fluctuates with changes in the market values of the stocks
included in the index. Examples of stock indexes are the Standard & Poor's 500
Stock Index (Chicago Board of Options Exchange), the New York Stock Exchange
Composite Index (New York Stock Exchange), The Financial Times-Stock Exchange
100 (London Traded Options Market), the Nikkei 225 Stock Average (Osaka
Securities Exchange) and Tokyo Stock Price Index (Tokyo Stock Exchange).
Options on stock indexes are generally similar to options on stock
except that the delivery requirements are different. Instead of giving the right
to take or make delivery of stock at a fixed price ("strike price"), an option
on a stock index gives the holder the right to receive a cash "exercise
settlement amount" equal to (a) the amount, if any, by which the strike price of
the option exceeds (in the case of a put) or is less than (in the case of a
call) the closing value of the underlying index on the date of exercise,
multiplied by (b) a fixed "index multiplier". Receipt of this cash amount
depends upon the closing level of the stock index upon which the option is based
being greater than, in the case of a call, or less than, in the case of a put,
the price of the option. The amount of cash received is equal to such difference
between the closing price of the index and the strike price of the option
expressed in U.S. dollars or a foreign currency, as the case may be, times a
specified multiple.
The effectiveness of purchasing stock index options as a hedging
technique depends upon the extent to which price movements in the portion of the
securities portfolio being hedged correlate with price movements of the stock
index selected. The value of an index option depends upon future movements in
the level of the overall stock market measured by the underlying index before
the expiration of the option. Accordingly, the successful use of options on
stock indexes is subject to the Investment Adviser's ability both to select an
appropriate index and to predict future price movements over the short term in
the overall stock market. Brokerage costs are incurred in the purchase of stock
index options and the incorrect choice of an index or an incorrect assessment of
future price movements may result in poorer overall performance than if a stock
index option had not been purchased.
Options on Currencies.
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 currencies may be purchased
for the Portfolio, although the current intention is not to do so in such a
manner that more than 5% of the Portfolio's net assets would be at risk. A call
option on a currency gives the purchaser of the option the right to buy the
underlying currency at a fixed price, either at any time during the option
period (American style) or on the expiration date (European style). Similarly, a
put option gives the purchaser of the option the right to sell the underlying
currency at a fixed price, either at any time during the option period or on the
expiration date. To liquidate a put or call option position, a "closing sale
transaction" may be made for the Portfolio at any time prior to the expiration
of the option, such a transaction involves selling the option previously
purchased. Options on currencies are traded both on recognized exchanges (such
as the Philadelphia Options Exchange) and over-the-counter.
The value of a currency option purchased depends upon future changes in
the value of that currency before the expiration of the option. Accordingly, the
successful use of options on currencies is subject to the Investment Adviser's
ability to predict future changes in the value of currencies over the short
term.
4
<PAGE>
Brokerage costs are incurred in the purchase of currency options and an
incorrect assessment of future changes in the value of currencies may result in
a poorer overall performance than if such a currency had not been purchased.
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 may be entered into for the Portfolio.
In order to assure that a Portfolio is not deemed a "commodity pool" for
purposes of the Commodity Exchange Act, regulations of the Commodity Futures
Trading Commission ("CFTC") require that each Portfolio enter into transactions
in Futures Contracts and options on Futures Contracts only (i) for bona fide
hedging purposes (as defined in CFTC regulations), or (ii) for non-hedging
purposes, provided that the aggregate initial margin and premiums on such
non-hedging positions does not exceed 5% of the liquidation value of a
Portfolio's assets.
Futures Contracts provide for the making and acceptance of a cash
settlement based upon changes in the value of an index of stocks and are used to
hedge against anticipated future changes in overall stock market prices which
otherwise might either adversely affect the value of securities held for a
Portfolio or adversely affect the prices of securities which are intended to be
purchased at a later date. A Futures Contract may also be entered into to close
out or offset an existing futures position.
In general, each transaction in Futures Contracts involves the
establishment of a position which is expected to move in a direction opposite to
that of the investment being hedged. If these hedging transactions are
successful, the futures positions taken would rise in value by an amount which
approximately offsets the decline in value of the portion of a Portfolio's
investments that is being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not be
achieved or a loss may be realized. There is also the risk of a potential lack
of liquidity in the secondary market.
The effectiveness of entering into Futures Contracts as a hedging technique
depends upon the extent to which price movements in the portion of the
securities portfolio being hedged correlate with price movements of the stock
index selected. The value of a Futures Contract depends upon future movements in
the level of the overall stock market measured by the underlying index before
the closing out of the Futures Contract. Accordingly, the successful use of
Futures Contracts is subject to the Investment Adviser's ability both to select
an appropriate index and to predict future price movements over the short term
in the overall stock market. The incorrect choice of an index or an incorrect
assessment of future price movements over the short term in the overall stock
market 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.
5
<PAGE>
When the Portfolio enters into a Futures Contract, it is initially
required to deposit, in a segregated account in the name of the broker
performing 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 a Portfolio may be required to make subsequent deposits of cash
or eligible securities called "variation margin", with its futures contract
clearing broker, which are reflective of price fluctuations in the Futures
Contract.
Currently, investments in Futures Contracts on non-U.S. stock indexes by
U.S. investors, such as the Portfolios, can be purchased on such non-U.S. stock
indexes as the Osaka Stock Exchange (OSE), Tokyo Stock Exchange (TSE), Hong Kong
Futures Exchange (HKFE), Singapore International Monetary Exchange (SIMEX),
London International Financial Futures and Options Exchange (LIFFE), Marche
Terme International de France (MATIF), Sydney Futures Exchange Ltd. (SFE), Meff
Sociedad Rectora de Productos Financieros Derivados de Renta Variable, S.A.
(MEFF RENTA VARIABLE), Deutsche Terminborse (DTB), Italian Stock Exchange (ISE),
Financiele Termijnmarkt Amsterdam (FTA), and London Securities and Derivatives
Exchange, Ltd. (OMLX).
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 an
index subject to Futures Contracts (and thereby the Futures Contract prices) may
correlate imperfectly with the behavior of the cash prices of portfolio
securities. Another such risk is that the price of the Futures Contract may not
move in tandem with the change in overall stock market prices against which a
Portfolio seeks a hedge.
Over-the-counter options ("OTC Options") purchased are treated as not readily
marketable. (See "Investment Restrictions".)
6
<PAGE>
Foreign 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 Portfolio may enter into
forward foreign exchange contracts in order to protect the dollar value of all
investments in securities 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 of portfolio securities up to 30% of the total value of the Portfolio
are permitted. Securities of the Portfolio 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 Portfolio at least equal at all times to 100%
of the market value of the securities loaned plus accrued income. By lending
securities, the Portfolio's income can be increased by its continuing to receive
income on the loaned securities as well as by the opportunity to receive
interest on the collateral. All or any portion of interest earned on invested
collateral may be paid to the borrower. Loans are subject to termination by the
Portfolio in the normal settlement time, currently three business days after
notice, or by the borrower on one day's notice. Borrowed securities are returned
when the loan is terminated. Any appreciation or depreciation in the market
price of the borrowed securities which occurs during the term of the loan inures
to the Portfolio and its investors. Reasonable finders' and custodial fees may
be paid in connection with a loan. In addition, all facts and circumstances,
including the creditworthiness of the borrowing financial institution, are
considered before a loan is made and no loan is made in excess of one year.
There is the risk that a borrowed security may not be returned to the Portfolio.
Securities are not loaned to Brown Brothers Harriman & Co. or to any affiliate
of the Corporation, the Portfolio or Brown Brothers Harriman & Co.
7
<PAGE>
Short-Term Investments
Although it is intended that the assets of the Portfolio stay invested
in the securities described above and in the Prospectus to the extent practical
in light of the Portfolio's investment objective and long-term investment
perspective, the Portfolio'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 Portfolio experiences large cash inflows through
additional investments by its investors or the sale of portfolio securities, and
desirable equity securities that are consistent with its investment objective
are unavailable in sufficient quantities, assets may be held in short-term
investments for a limited time pending availability of such equity securities.
Short-term instruments consist of 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 Portfolio's assets are invested in commercial paper,
bank obligations or repurchase agreements, the issuer must have outstanding debt
rated A or higher by Moody's 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 Portfolio 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 Portfolio in demand deposit accounts with the
Portfolio's custodian bank.
Government Securities
The assets of each Portfolio may be invested in securities issued by the U.S.
Government or sovereign foreign governments, their agencies or
instrumentalities. These securities include notes and bonds, 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 a Portfolio. The price paid for these securities, or received upon
resale, may be lower than the price paid or received for similar securities with
a more liquid market. Accordingly, the valuation of these securities reflects
any limitation on their liquidity. (See "Investment Restrictions".)
When-Issued and Delayed Delivery Securities
Securities may be purchased for a Portfolio on a when-issued or delayed
delivery basis. For example, delivery and payment may take place a month or more
after the date of the transaction. The purchase price and the
8
<PAGE>
interest rate payable on the securities, if any, are fixed on the transaction
date. The securities so purchased are subject to market fluctuation and no
income accrues to a Portfolio until delivery and payment take place. At the time
the commitment to purchase securities on a when-issued or delayed delivery basis
is made, the transaction is recorded and thereafter the value of such securities
is reflected each day in determining that Portfolio's net asset value. Each
Portfolio maintains with the Custodian a separate account with a segregated
portfolio of securities in an amount at least equal to these commitments. At the
time of its acquisition, a when-issued or delayed delivery security may be
valued at less than the purchase price. Commitments for such when-issued or
delayed delivery securities are made only when there is an intention of actually
acquiring the securities. On delivery dates for such transactions, such
obligations are met from maturities or sales of securities and/or from cash
flow. If the right to acquire a when-issued or delayed delivery security is
disposed of prior to its acquisition, a Portfolio could, as with the disposition
of any other portfolio obligation, incur a gain or loss due to market
fluctuation. When-issued or delayed delivery commitments for a Portfolio may not
be entered into if such commitments exceed in the aggregate 15% of the market
value of its total assets, less liabilities other than the obligations created
by when-issued or delayed delivery commitments.
Investment Company Securities
Subject to applicable statutory and regulatory limitations, the assets of
each Portfolio may be invested in shares of other investment companies. Under
the 1940 Act, the assets of each Portfolio may be invested in shares of other
investment companies in connection with a merger, consolidation, acquisition or
reorganization or if immediately after such investment (i) 10% or less of the
market value of the Portfolio's total assets would be so invested, (ii) 5% or
less of the market value of the Portfolio's total assets would be invested in
the shares of any one such company, and (iii) 3% or less of the total
outstanding voting stock of any other investment company would be owned by the
Portfolio. As a shareholder of another investment company, the Portfolio would
bear, along with other shareholders, its pro rata portion of the other
investment company's expenses, including advisory fees. These expenses would be
in addition to the advisory and other expenses that a Portfolio bears directly
in connection with its own operations.
Repurchase Agreements
Repurchase agreements may be entered into for the Portfolio only with a
"primary dealer" (as designated by the Federal Reserve Bank of New York) in U.S.
Government securities. This is an agreement in which the seller (the "Lender")
of a security agrees to repurchase from a Portfolio the security sold at a
mutually agreed upon time and price. As such, it is viewed as the lending of
money to the Lender. The resale price normally is in excess of the purchase
price, reflecting an agreed upon interest rate. The rate is effective for the
period of time assets of the Portfolio are invested in the agreement and is not
related to the coupon rate on the underlying security. The period of these
repurchase agreements is usually short, from overnight to one week. The
securities which are subject to repurchase agreements, however, may have
maturity dates in excess of one week from the effective date of the repurchase
agreement. The Portfolio always receives as collateral securities which are
issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
Collateral is marked to the market daily and has a market value including
accrued interest at least equal to 100% of the dollar amount invested by the
Portfolio in each agreement along with accrued
9
<PAGE>
interest. Payment for such securities is made for the Portfolio only upon
physical delivery or evidence of book entry transfer to the account of State
Street Bank and Trust Company (the "Custodian"). If the Lender defaults, the
Portfolio might incur a loss if the value of the collateral securing the
repurchase agreement declines and might incur disposition costs in connection
with liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the Lender, realization upon the collateral of the
Portfolio may be delayed or limited in certain circumstances.
INVESTMENT RESTRICTIONS
=============================================================================
The Fund and the Portfolio are operated under the following investment
restrictions which are deemed fundamental policies and may be changed only with
the approval of the holders of a "majority of the outstanding voting securities"
(as defined in the 1940 Act) of the Fund or the Portfolio, as the case may be
(see "Additional Information").
Except that the Corporation may invest all of the Fund's assets in an
open-end investment company with substantially the same investment objective,
policies and restrictions as the Fund, the Portfolio and 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 or the withdrawal of part or all of the Fund's interest in the
Portfolio, as the case may be, while effecting an orderly liquidation of
portfolio securities or to maintain liquidity in the event of an unanticipated
failure to complete a portfolio security transaction or other similar
situations), provided that collateral arrangements with respect to options and
futures, including deposits of initial deposit and variation margin, are not
considered a pledge of assets for purposes of this restriction and except that
assets may be pledged to secure letters of credit solely for the purpose of
participating in a captive insurance company sponsored by the Investment Company
Institute;
(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;
10
<PAGE>
(3) write, purchase or sell any put or call option or any combination
thereof, provided that this shall not prevent (i) the purchase, ownership,
holding or sale of warrants where the grantor of the warrants is the issuer of
the underlying securities, or (ii) the purchase, ownership, holding or sale of
futures and options, other than the writing of put options;
(4) underwrite securities issued by other persons except insofar as it
may technically be deemed an underwriter under the Securities Act of 1933, as
amended in selling a portfolio security;
(5) make loans to other persons except (a) through the lending of its
portfolio securities and provided that any such loans not exceed 30% of its net
assets (taken at market value), (b) through the use of repurchase agreements or
the purchase of short-term obligations and provided that not more than 10% of
its net assets is invested in repurchase agreements maturing in more than seven
days, or (c) by purchasing, subject to the limitation in paragraph (6) below, a
portion of an issue of debt securities of types commonly distributed privately
to financial institutions, for which purposes the purchase of short-term
commercial paper or a portion of an issue of debt securities which are part of
an issue to the public shall not be considered the making of a loan;
(6) knowingly invest in securities which are subject to legal or
contractual restrictions on resale (other than repurchase agreements maturing in
not more than seven days) if, as a result thereof, more than 10% of its net
assets (taken at market value) would be so invested (including repurchase
agreements maturing in more than seven days);
(7) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts
(except futures and option contracts) in the ordinary course of business (the
freedom of action to hold and to sell real estate acquired as a result of the
ownership of securities is reserved);
(8) make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment of
any further consideration, for securities of the same issue as, and equal in
amount to, the securities sold short, and unless not more than 10% of its net
assets (taken at market value) is represented by such securities, or securities
convertible into or exchangeable for such securities, at any one time (it is the
present intention of management to make such sales only for the purpose of
deferring realization of gain or loss for federal income tax purposes; such
sales would not be made of securities subject to outstanding options);
(9) concentrate its investments in any particular industry, but if it
is deemed appropriate for the achievement of its investment objective, up to 25%
of its assets, at market value at the time of each investment, may be invested
in any one industry, except that positions in futures or option contracts shall
not be subject to this restriction;
11
<PAGE>
(10) issue any senior security (as that term is defined in the 1940
Act) if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder, provided that collateral arrangements
with respect to options and futures, including deposits of initial deposit and
variation margin, are not considered to be the issuance of a senior security for
purposes of this restriction.
Non-Fundamental Restrictions. The Portfolio or the Corporation, on
behalf of 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;
(iii) invest less than 65% of the value of the total assets of the Portfolio in
equity securities of companies based in countries in which it invests (For these
purposes, equity securities are defined as common stock, securities convertible
into common stock, rights and warrants, and include securities purchased
directly and in the form of American Depository Receipts, Global Depository
Receipts or other similar securities representing common stock of foreign-based
companies); (iv) invest more than 10% of the Portfolio's assets in less
developed markets; or (v) invest more than 5% of the Portfolio's assets in any
one less developed market. The Appendix provides a comparison of Market
Capitalization, Gross Domestic Product (GDP) and Population of the developed
countries in which the Portfolio invests. These policies are not fundamental and
may be changed without shareholder or investor approval.
Percentage and Rating Restrictions. If a percentage or rating
restriction on investment or utilization of assets set forth above or referred
to in the Prospectus is adhered to at the time an investment is made or assets
are so utilized, a later change in percentage resulting from changes in the
value of the portfolio securities or a later change in the rating of a portfolio
security is not considered a violation of policy. If the Fund's and the
Portfolio's respective investment restrictions relating to any particular
investment practice or policy are not consistent, the Portfolio has agreed with
the Corporation that it will adhere to the more restrictive limitation.
12
<PAGE>
DIRECTORS, TRUSTEES AND OFFICERS
=============================================================================
The Corporation's Directors, in addition to supervising the actions of the
Administrator of the Corporation and Distributor, as set forth below, decide
upon matters of general policy with respect to the Corporation. The Portfolio's
Trustees, in addition to supervising the actions of the Portfolio's Investment
Adviser and Administrator, as set forth below, decide upon matters of general
policy with respect to the Portfolio. The Corporation's Directors are not the
same individuals as the Portfolio's Trustees.
Because of the services rendered to the Portfolio by the Investment Adviser
and to the Corporation and the Portfolio by their respective Administrators, the
Corporation and the Portfolio require no employees, and their respective
officers, other than the Chairmen, receive no compensation from the Fund or
Portfolio.
The Directors of the Corporation, Trustees of the Portfolio and
executive officers of the Corporation and the Portfolio, their principal
occupations during the past five years (although their titles may have varied
during the period) and business addresses are:
DIRECTORS OF THE CORPORATION
J.V. SHIELDS, JR.* -- Chairman of the Board and Director; Trustee of
The 59 Wall Street Trust; Managing Director, Chairman and Chief Executive
Officer of Shields & Company; Chairman and Chief Executive Officer of Capital
Management 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; Vought Aircraft Corporation (prior
to September 1994), Caterair International (prior to April 1994); Advisory
Committee of Carlyle Group and Pittsburgh Seed Fund and Valuation Committee of
Morgenthaler
13
<PAGE>
Venture Funds(2). His business address is Richard K. Mellon and Sons,
P.O. Box RKM, Ligonier, PA 15658.
TRUSTEES OF THE PORTFOLIO
H.B. ALVORD** -- Chairman of the Board and Trustee; Retired; Trustee of
the Trust (from September 1990 to October 1994); Director of The 59 Wall Street
Fund, Inc. (from September 1990 to October 1994); Trustee of Landmark Funds III,
Landmark Tax Free Reserves, Landmark Multi-State Tax Free Funds, Landmark Tax
Free Income Funds, Landmark Fixed Income Funds, Landmark Funds I, Landmark Funds
II, and Landmark International Equity Fund (from September 1990 to May 1997).
His business address is P.O.
Box 5203, Carmel, CA 93921.
RICHARD L. CARPENTER** -- Trustee; Retired; Director of Internal
Investments, Public School Employees' Retirement System (prior to December
1995). His business address is 12664 Lazy Acres Court, Nevada City, CA 95959.
CLIFFORD A. CLARK** -- Trustee; Retired; Director of Schmid, Inc.
(prior to July 1993); Managing Director of the Smith-Denison Foundation. His
business address is 42 Clowes Drive, Falmouth, MA 02540.
DAVID M. SEITZMAN** -- Trustee; Retired; Physician with Seitzman,
Shuman, Kwart and Phillips (prior to October 1997); Director of the National
Capital Underwriting Company, Commonwealth Medical Liability Insurance Co. and
National Capital Insurance Brokerage, Limited. His business address is 7117
Nevis Road, Bethesda, MD 20817.
OFFICERS OF THE CORPORATION AND THE PORTFOLIO
PHILIP W. COOLIDGE -- President; Chief Executive Officer and President
of Signature Financial Group, Inc. ("SFG"), 59 Wall Street Distributors, Inc.
("59 Wall Street Distributors") and 59 Wall Street Administrators, Inc. ("59
Wall Street Administrators").
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, SFG;
Secretary of 59 Wall Street Distributors and 59 Wall Street Administrators.
14
<PAGE>
SUSAN JAKUBOSKI*** -- Assistant Treasurer and Assistant Secretary of the
Portfolio; Assistant Secretary, Assistant Treasurer and Vice President of
Signature Financial Group (Grand Cayman) Limited (since August 1994); Fund
Compliance Administrator of Concord Financial Group, Inc. (from November 1990 to
August 1994). Her business address is Signature Financial Group (Grand Cayman)
Limited, Elizabethan Square, George Town, Grand Cayman, Cayman Islands, B.W.I.
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 and the
Portfolio because of his affiliation with a registered broker-dealer.
**These Directors and Trustees are members of the Audit Committee of
the Corporation or the Portfolio, as the case may be.
***Ms. Jakuboski is an officer of the Portfolio but is not an officer
of the Corporation.
(1) Shields & Company, Capital Management Associates, Inc. and Flowers
Industries, Inc., with which Mr. Shields is associated, are a registered
broker-dealer and a member of the New York Stock Exchange, a registered
investment adviser, and a diversified food company, respectively.
(2) Richard K. Mellon and Sons, Richard King Mellon Foundation, 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, an aircraft manufacturer, an airline
food services company, a merchant bank, and a venture capital partnership,
respectively.
Each Director and officer of the Corporation listed above holds the
equivalent position with The 59 Wall Street Trust. The address of each officer
of the Corporation and the Portfolio is 21 Milk Street, Boston, Massachusetts
02109. Messrs. Coolidge, Hoolahan and Elder and Mss. Gibson, Jakuboski, Mugler
and Drapeau also hold similar positions with other investment companies for
which affiliates of 59 Wall Street Distributors serves as the principal
underwriter.
15
<PAGE>
Except for Mr. Shields, no Director or Trustee is an "interested
person" of the Corporation or the Portfolio, respectively, as that term is
defined in the 1940 Act.
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>
<CAPTION>
<S> <C> <C> <C> <C>
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., $[] none none $[]
Director
Eugene P. Beard, $[] none none $[]
Director
David P. Feldman, $[] none none $[]
Director
Alan G. Lowy, $[] none none $[]
Director
Arthur D.
Miltenberger, $[] none none $[]
Director
<FN>
* The Fund Complex consists of the Corporation and The 59 Wall Street Trust
which currently consists of three series.
</FN>
</TABLE>
Portfolio Trustees
The Trustees of the Portfolio receive a base annual fee of $12,000 (except
the Chairman who receives a base annual fee of $17,000) which is paid jointly by
the U.S. Money Market Portfolio, International Equity Portfolio and U.S Mid-Cap
Portfolio together with the Portfolio (the "Portfolios") and allocated among the
Portfolios based upon their respective net assets. In addition, each Portfolio
which has commenced operations pays an annual fee to each Trustee of $1,000.
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Compensation
Pension or from the
Retirement the Portfolio
Aggregate Benefits Accrued Estimated Annual Complex*
Name of Person, Compensation as Part of Benefits upon Paid
Position from the Port. Portfolio Expenses Retirement to Trustees
H.B. Alvord, $[] none none $[]
Trustee
Richard L. Carpenter$[] none none $[]
Trustee
Clifford A. Clark $[] none none $[]
Trustee
David M. Seitzman $[] none none $[]
Trustee
<FN>
*The Portfolio Complex consists of the Portfolio, U.S. Money Market
Portfolio, International Equity Portfolio and U.S. Mid-Cap Portfolio.
</FN>
</TABLE>
By virtue of the responsibilities assumed by Brown Brothers Harriman & Co.
under the Investment Advisory Agreement with the Portfolio and the
Administration Agreement with the Corporation, and by Brown Brothers Harriman
Trust Company (Cayman) Limited under the Administration Agreement with the
Portfolio (see "Investment Adviser" and "Administrators"), none of the
Corporation and the Portfolio requires employees other than its officers, and
none of its officers devote full time to the affairs of the Corporation or the
Portfolio, as the case may be, or, other than the Chairmen, receive any
compensation from the Corporation or the Portfolio.
As of January 31, 1999, the Directors of the Corporation, Trustees of the
Portfolio and officers of the Corporation and the Portfolio as a group
beneficially owned less than 1% of the outstanding shares of the Corporation and
less than 1% of the aggregate beneficial interests in the Portfolio.
17
<PAGE>
At the close of business on that date, no person, to the knowledge of
the management, owned beneficially more than 5% of the outstanding shares of the
Fund except that : Fleckenstein Family Foundation owned [ ] ([ ]%) and BBH Trust
(f/b/o descendants of Edward Roland Harriman ) owned [ ] ([ ]%) of the
outstanding shares of the Fund. As of that date, the partners of Brown Brothers
Harriman & Co. and their immediate families owned [ ]
18
<PAGE>
([ ]%) shares of the Fund. Brown Brothers Harriman & Co. and its
affiliates separately are able to direct the disposition of an additional [ ]
([ ]%) shares of the Fund, as to which shares Brown Brothers Harriman & Co.
disclaims beneficial ownership.
INVESTMENT ADVISER
================================================================================
Under its Investment Advisory Agreement with the Portfolio, subject to the
general supervision of the Portfolio's Trustees and in conformance with the
stated policies of the Portfolio, Brown Brothers Harriman & Co. provides
investment advice and portfolio management services to the Portfolio. In this
regard, it is the responsibility of Brown Brothers Harriman & Co. to make the
day-to-day investment decisions for the Portfolio, to place the purchase and
sale orders for portfolio transactions and to manage, generally, the Portfolio's
investments.
The Investment Advisory Agreement between Brown Brothers Harriman & Co. and
the Portfolio is dated August 23, 1994 and remains in effect for two years from
such date and thereafter, but only so long as the agreement is specifically
approved at least annually (i) by a vote of the holders of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Portfolio, or
by the Portfolio's Trustees, and (ii) by a vote of a majority of the Trustees of
the Portfolio who are not parties to the Investment Advisory Agreement or
"interested persons" (as defined in the 1940 Act) of the Portfolio ("Independent
Trustees"), cast in person at a meeting called for the purpose of voting on such
approval. The Investment Advisory Agreement was most recently approved by the
Independent Trustees of the Portfolio 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 Trustees of the Portfolio or
by a vote of the holders of a "majority of the outstanding voting securities"
(as defined in the 1940 Act) of the Portfolio on 60 days' written notice to
Brown Brothers Harriman & Co. and by Brown Brothers Harriman & Co. on 90 days'
written notice to the Portfolio (see "Additional Information").
The investment advisory fee paid to the Investment Adviser from the
Portfolio is calculated daily and paid monthly at an annual rate equal to 0.65%
of the average daily net assets of the Portfolio. For the fiscal years ended
October 31, 1998, October 31, 1997 and October 31, 1996, the Portfolio incurred
$ [], $293,880 and $226,127, respectively, for advisory fees.
The investment advisory services of Brown Brothers Harriman & Co. to
the Portfolio are not exclusive under the terms of the Investment Advisory
Agreement. Brown Brothers Harriman & Co. is free to and does render investment
advisory services to others, including other registered investment companies.
Pursuant to a license agreement between the Corporation and Brown Brothers
Harriman & Co. dated September 5, 1990, as amended as of December 15, 1993, the
Corporation may 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
19
<PAGE>
expiration or earlier termination of any investment advisory agreement between a
Fund or any investment company in which a series of the Corporation invests all
of its assets and Brown Brothers Harriman & Co. Termination of the agreement
would require the Corporation to change its name and the name of each Fund to
eliminate all reference to "59 Wall Street".
Pursuant to license agreements between Brown Brothers Harriman & Co. and each
of 59 Wall Street Administrators and 59 Wall Street Distributors (each a
"Licensee"), dated June 22, 1993 and June 8, 1990, respectively, each Licensee
may continue to use in its name "59 Wall Street", the current and historic
address of Brown Brothers Harriman & Co., only if Brown Brothers Harriman & Co.
does not terminate the respective license agreement, which would require the
Licensee to change its name to eliminate all references 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
Corporation. There is presently no controlling precedent prohibiting financial
institutions such as Brown Brothers Harriman & Co. from performing the
investment advisory, administrative or shareholder servicing/eligible
institution functions described above. If Brown Brothers Harriman & Co. were to
terminate its Investment Advisory Agreements with the Portfolio, or were
prohibited from acting in such capacity, it is expected that the Trustees of the
Portfolio would recommend to the investors that they approve a new investment
advisory agreement for the Portfolio with another qualified adviser. If Brown
Brothers Harriman & Co. were to terminate its Shareholder Servicing Agreement,
Eligible Institution Agreement or Administration Agreement with the Corporation
or were prohibited from acting in any such capacity, its customers would be
permitted to remain shareholders of each Fund and alternative means for
providing shareholder services or administrative services, as the case may be,
would be sought. In such event, although the operation of the Corporation might
change, it is not expected that any shareholders would suffer any adverse
financial consequences. However, an alternative means of providing shareholder
services might afford less convenience to shareholders.
ADMINISTRATORS
================================================================================
Brown Brothers Harriman & Co. acts as Administrator of the Corporation
and Brown Brothers Harriman Trust Company (Cayman) Limited acts as Administrator
of each Portfolio. Brown Brothers Harriman Trust Company (Cayman) Limited is a
wholly-owned subsidiary of Brown Brothers Harriman Trust Company of New York,
which is a wholly-owned subsidiary of Brown Brothers Harriman & Co.
In its capacity as Administrator of the Corporation, Brown Brothers
Harriman & Co. administers all aspects of the Corporation's operations subject
to the supervision of the Corporation's Directors except as set forth below
under "Distributor". In connection with its responsibilities as Administrator
and at its own expense, Brown Brothers Harriman & Co. (i) provides the
Corporation with the services of persons competent to perform such supervisory,
administrative and clerical functions as are necessary in order to provide
effective administration of the Corporation, including the maintenance of
certain books and records; (ii) oversees the performance of administrative and
professional services to the Corporation by others, including the Funds'
Custodian, Transfer
20
<PAGE>
and Dividend Disbursing Agent; (iii) provides the Corporation with adequate
office space and communications and other facilities; and (iv) prepares and/or
arranges for the preparation, but does not pay for, the periodic updating of the
Corporation's registration statement and each Fund's prospectus, the printing of
such documents for the purpose of filings with the Securities and Exchange
Commission and state securities administrators, and the preparation of tax
returns for each Fund and reports to each Fund's shareholders and the Securities
and Exchange Commission.
Brown Brothers Harriman Trust Company (Cayman) Limited, in its capacity
as Administrator of each Portfolio, administers all aspects of the Portfolio's
operations subject to the supervision of the Portfolio's Trustees except as set
forth above under "Investment Adviser". In connection with its responsibilities
as Administrator for each Portfolio and at its own expense, Brown Brothers
Harriman Trust Company (Cayman) Limited (i) provides each Portfolio with the
services of persons competent to perform such supervisory, administrative and
clerical functions as are necessary in order to provide effective administration
of the Portfolio, including the maintenance of certain books and records,
receiving and processing requests for increases and decreases in the beneficial
interests in the Portfolio, notification to the Investment Adviser of available
funds for investment, reconciliation of account information and balances between
the Custodian and the Investment Adviser, and processing, investigating and
responding to investor inquiries; (ii) oversees the performance of
administrative and professional services to each Portfolio by others, including
the Custodian; (iii) provides each Portfolio with adequate office space and
communications and other facilities; and (iv) prepares and/or arranges for the
preparation, but does not pay for, the periodic updating of each Portfolio's
registration statement for filing with the Securities and Exchange Commission,
and the preparation of tax returns for each Portfolio and reports to investors
and the Securities and Exchange Commission.
The Administration Agreements between the Corporation and Brown
Brothers Harriman & Co. (dated November 1, 1993) and between the Portfolio and
Brown Brothers Harriman Trust Company (Cayman) Limited (dated August 23, 1994)
will remain in effect for two years from such respective date and thereafter,
but only so long as each such agreement is specifically approved at least
annually in the same manner as the Portfolio's Investment Advisory Agreement
(see "Investment Adviser"). The Independent Directors most recently approved the
Corporation's Administration Agreement on November 10, 1998. The Portfolio's
Administration Agreement was most recently approved by the Independent Trustees
of the Portfolio on November 10, 1998. Each agreement will terminate
automatically if assigned by either party thereto and is terminable by the
Corporation or the Portfolio at any time without penalty by a vote of a majority
of the Directors of the Corporation or the Trustees of the Portfolio, as the
case may be, or by a vote of the holders of a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the Corporation or the
Portfolio, as the case may be (see "Additional Information"). The Corporation's
Administration Agreement is terminable by the Directors of the Corporation or
shareholders of the Corporation on 60 days' written notice to Brown Brothers
Harriman & Co. The Portfolio's Administration Agreement is terminable
21
<PAGE>
by the Trustees of the Portfolio or by the Portfolio's corresponding Fund and
other investors in the Portfolio on 60 days' written notice to Brown Brothers
Harriman Trust Company (Cayman) Limited. Each agreement is terminable by the
contracting Administrator on 90 days' written notice to the Corporation or the
Portfolio, as the case may be.
The administrative fee payable to Brown Brothers Harriman & Co. from
the Fund is calculated daily and payable monthly at an annual rate equal to
0.125% of the Fund's average daily net assets. For the period June 6, 1997
through October 31, 1997, the Fund incurred $2,739 for administrative services.
For the fiscal year ended October 31, 1998, the Fund incurred [] for
administrative services.
The administrative fee paid to Brown Brothers Harriman Trust Company
(Cayman) Limited by the Portfolio is calculated and paid monthly at an annual
rate equal to 0.035% of the Portfolio's average daily net assets. Brown Brothers
Harriman Trust Company (Cayman) Limited is a wholly-owned subsidiary of Brown
Brothers Harriman Trust Company of New York, which is a wholly-owned subsidiary
of Brown Brothers Harriman & Co. For the fiscal years ended October 31, 1998,
October 31, 1997 and October 31, 1996, the Portfolio incurred $[] , $15,824 and
$12,176, 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. ("SFG"). SFG is not affiliated
with Brown Brothers Harriman & Co. 59 Wall Street Administrators'
subadministrative duties may include providing equipment and clerical personnel
necessary for maintaining the organization of the Corporation, participation in
the preparation of documents required for compliance by the Corporation with
applicable laws and regulations, preparation of certain documents in connection
with meetings of Directors and shareholders of the Corporation, and other
functions that would otherwise be performed by the Administrator as set forth
above. For performing such subadministrative services, 59 Wall Street
Administrators receives such compensation as is from time to time agreed upon,
but not in excess of the amount paid to the Administrator from the Fund.
Pursuant to a Subadministrative Services Agreement with Brown Brothers
Harriman Trust Company (Cayman) Limited, SFG-Cayman performs such
subadministrative duties for the Portfolio as are from time to time agreed upon
by the parties. The offices of SFG-Cayman are located at Elizabethan Square,
George Town, Grand Cayman BWI. SFG-Cayman is a wholly-owned subsidiary of
Signature Financial Group, Inc. ("SFG"). SFG is not affiliated with Brown
Brothers Harriman & Co. SFG-Caymans' subadministrative duties may include
providing equipment and clerical personnel necessary for maintaining the
organization of the Portfolio, participation in the preparation of documents
required for compliance by the Portfolio with applicable laws and regulations,
preparation of certain documents in connection with meetings of Trustees of and
investors in the Portfolio, and other functions that would otherwise be
performed by the Administrator of the Portfolio as set forth above. For
performing such subadministrative services, SFG-Cayman receives such
compensation as is from time to time agreed upon, but not in excess of the
amount paid to the Administrator from the Portfolio.
22
<PAGE>
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.
23
<PAGE>
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 Portfolio's
Investment Advisory Agreement (see "Investment Adviser"). The Distribution
Agreement was approved by the Independent Directors of the Corporation on
February 24, 1998. 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 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
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<PAGE>
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 Funds; 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 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 agreement dated August 23, 1994, Brown Brothers Harriman Trust
Company (Cayman) Limited pays the expenses of the Portfolio, other than fees
paid to Brown Brothers Harriman & Co. under the Portfolio's Administration
Agreement and other than expenses relating to the organization of the Portfolio.
In return, Brown Brothers Harriman Trust Company (Cayman) Limited receives a fee
from the Portfolio such that after such payment
25
<PAGE>
the aggregate expenses of the Portfolio do not exceed an agreed upon annual
rate, currently 0.90% of the average daily net assets of the Portfolio. Such
fees are computed daily and paid monthly.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
================================================================================
State Street Bank and Trust Company ("State Street" or the "Custodian"), 225
Franklin Street, P.O. Box 351, Boston, Massachusetts 02110, is Custodian for the
Funds and the Portfolios and Transfer and Dividend Disbursing Agent for the
Funds.
As Custodian for the Fund, it is responsible for holding the Fund's assets
(i.e., cash and the Fund's interest in the Portfolio) pursuant to a custodian
agreement with the Corporation. Cash is held for the Fund in demand deposit
accounts at the Custodian. Subject to the supervision of the Administrator of
the Corporation, the Custodian maintains the accounting records for the Fund and
each day computes the net asset value per share of the Fund. As Transfer and
Dividend Disbursing Agent it is responsible for maintaining the books and
records detailing the ownership of the Fund's shares.
As Custodian for the Portfolio, it is responsible for maintaining books and
records of portfolio transactions and holding the Portfolio's securities and
cash pursuant to a custodian agreement with the Portfolio. Cash is held for the
Portfolio in demand deposit accounts at the Custodian. Subject to the
supervision of the Administrator of the Portfolio, the Custodian maintains the
accounting and portfolio transaction records for the Portfolio and each day
computes the net asset value and net income of the Portfolio.
INDEPENDENT AUDITORS
================================================================================
Deloitte & Touche LLP, Boston, Massachusetts are the independent auditors for
the Fund. Deloitte & Touche, Grand Cayman are the independent auditors for the
Portfolio.
NET ASSET VALUE; REDEMPTION IN KIND
================================================================================
The Fund's net asset value per share is determined once daily at 4:00 p.m.,
New York time on each day the New York Stock Exchange is open for regular
trading. (As of the date of this Statement of Additional Information, such
Exchange is so open every weekday except for the following holidays: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas.) The determination
of the Fund's net asset value of per share is made by subtracting from the value
of the Fund's total assets (i.e., the value of its investment in the Portfolio
and other assets) the amount of its liabilities,
26
<PAGE>
including expenses payable or accrued, and dividing the difference by the number
of shares of the Fund outstanding at the time the determination is made.
The value of the Portfolio's net assets (i.e., the value of its securities
and other assets less its liabilities, including expenses payable or accrued) is
determined at the same time and on the same days as the net asset value per
share of the Fund is determined. The value of the Fund's investment in the
Portfolio is determined by multiplying the value of the Portfolio's net assets
by the percentage, effective for that day, which represents the Fund's share of
the aggregate beneficial interests in the Portfolio.
The value of investments listed on a domestic securities exchange is based on
the last sale prices as of the regular close of the New York Stock Exchange
(which is currently 4:00 P.M., New York time) or, in the absence of recorded
sales, at the average of readily available closing bid and asked prices on such
Exchange. Securities listed on a foreign exchange are valued at the last quoted
sale price available before the time at which net assets are valued.
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. For purposes of
calculating net asset value per share, all assets and liabilities initially
expressed in foreign currencies are converted into U.S. dollars at the
prevailing market rates available at the time of valuation.
Securities or other assets for which market quotations are not readily
available are valued at fair value in accordance with procedures established by
and under the general supervision and responsibility of the Portfolio's
Trustees. Such procedures include the use of independent pricing services, which
use prices based upon yields or prices of securities of comparable quality,
coupon, maturity and type; indications as to values from dealers; and general
market conditions. Short-term investments which mature in 60 days or less are
valued at amortized cost if their original maturity was 60 days or less, or by
amortizing their value on the 61st day prior to maturity, if their original
maturity when acquired was more than 60 days, unless this is determined not to
represent fair value by the Trustees of the Portfolio.
Trading in securities on most foreign exchanges and over-the-counter markets
is normally completed before the close of the New York Stock Exchange and may
also take place on days the New York Stock Exchange is closed. If events
materially affecting the value of foreign securities occur between the time when
the exchange on which they are traded closes and the time when the Portfolio's
net asset value is calculated, such securities would be valued at fair value in
accordance with procedures established by and under the general supervision of
the Portfolio's Trustees.
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
27
<PAGE>
(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 that Fund's net assets
at the beginning of such 90 day period.
COMPUTATION OF PERFORMANCE
================================================================================
The average annual total return of the Fund is calculated for any period by
(a) dividing (i) the sum of the aggregate net asset value per share on the last
day of the period of shares purchased with a $1,000 payment on the first day of
the period and the aggregate net asset value per share on the last day of the
period of shares purchasable with dividends and capital gains distributions
declared during such period with respect to shares purchased on the first day of
such period and with respect to shares purchased with such dividends and capital
gains distributions, by (ii) $1,000, (b) raising the quotient to a power equal
to 1 divided by the number of years in the period, and (c) subtracting 1 from
the result.
The total rate of return of the Fund for any specified period is calculated
by (a) dividing (i) the sum of the aggregate net asset value per share on the
last day of the period of shares purchased with a $1,000 payment on the first
day of the period and the aggregate net asset value per share on the last day of
the period of shares purchasable with dividends and capital gains distributions
declared during such period with respect to shares purchased on the first day of
such period and with respect to shares purchased with such dividends and capital
gains distributions, by (ii) $1,000, and (b) subtracting 1 from the result.
Historical total return information for any period or portion thereof
prior to the establishment of the Fund will be that of the Portfolio, adjusted
to assume that all charges, expenses and fees of the Fund and the Portfolio
which are presently in effect were deducted during such periods, as permitted by
applicable SEC staff interpretations. The
table that follows sets forth average annual total return information for the
periods indicated:
28
<PAGE>
Since inception 10/31/98
1 Year: []% []%
Commencement of
Operations* to
date: []% []%
* The Portfolio commenced operations on April 1, 1995.
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's Portfolio and the
Fund's and Portfolio's expenses during the period.
Total and average annual rate of return information may be useful for
reviewing the performance of the Fund and for providing a basis for comparison
with other investment alternatives. However, unlike bank deposits or other
investments which pay a fixed yield for a stated period of time, the Fund's
total rate of return fluctuates, and this should be considered when reviewing
performance or making comparisons.
29
<PAGE>
The Fund's performance may be used from time to time in shareholder
reports or other communications to shareholders or prospective investors.
Performance figures are based on historical earnings and are not intended to
indicate future performance. Performance information may include the Fund's
investment results and/or comparisons of its investment results to various
unmanaged indexes (such as the MSCI-EAFE Index) and to investments for which
reliable performance data is available. Performance information may also include
comparisons to averages, performance rankings or other information prepared by
recognized mutual fund statistical services. To the extent that unmanaged
indexes are so included, the same indexes are used on a consistent basis. The
Fund's investment results as used in such communications are calculated on a
total rate of return basis in the manner set forth below.
Period and average annualized "total rates of return" may be provided in such
communications. The "total rate of return" refers to the change in the value of
an investment in the Fund over a stated period based on any change in net asset
value per share and including the value of any shares purchasable with any
dividends or capital gains distributions during such period. Period total rates
of return may be annualized. An annualized total rate of return is a compounded
total rate of return which assumes that the period total rate of return is
generated over a one year period, and that all dividends and capital gains
distributions are reinvested. An annualized total rate of return is slightly
higher than a period total rate of return if the period is shorter than one
year, because of the assumed reinvestment.
30
<PAGE>
Historical performance information for any period or portion thereof prior to
the establishment of the Fund will be that of the Portfolio, adjusted to assume
that all charges, expenses and fees of the Fund and the Portfolio which are
presently in effect were deducted during such periods, as permitted by
applicable SEC staff interpretations.
PURCHASES AND REDEMPTIONS
================================================================================
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.
A confirmation of each purchase and redemption transaction is issued as
on execution of that transaction.
A shareholder's right to receive payment with respect to any redemption
may be suspended or the payment of the redemption proceeds postponed: (i) during
periods when the New York Stock Exchange is closed for other than weekends and
holidays or when regular trading on such Exchange is registered as determined by
the Securities and Exchange Commission by rule or regulation, (ii) during
periods in which an emergency exists which causes disposal of, or evaluation of
the net asset value of, portfolio securities to be unreasonable or
impracticable, or (iii) for such other periods as the Securities and Exchange
Commission may permit. An investor should be aware that redemptions from the
Fund may not be processed if a completed account application with a certified
taxpayer identification number has not been received. The Corporation reserves
the right to discontinue, alter or limit the automatic reinvestment privilege at
any time, but will provide shareholders prior written notice of any such
discontinuance, alteration or limitation.
FEDERAL TAXES
================================================================================
Each year, the Corporation intends to continue to qualify the Fund and elect
that the Fund be treated as a separate "regulated investment company" of 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 in excess of net short-term capital losses that are distributed to
their shareholders. A 4% non-deductible excise tax is imposed on the Fund to the
extent that certain distribution requirements for the Fund for each calendar
year are not met. The Corporation intends to continue to meet such requirements.
The Portfolio are also not required to pay any federal income or excise taxes.
Under Subchapter M of the Code, the Fund is not subject to federal income taxes
on amounts distributed to shareholders.
Dividends paid from the Fund are not eligible for the dividends-received
deduction allowed to corporate shareholders because the Net income of the
Portfolio does not consist of dividends paid by domestic corporations.
Qualification as a regulated investment company under the Code requires,
among other things, that (a) at least 90% of the Fund's annual gross income,
without offset for losses from the sale or other disposition of securities, be
derived from interest, payments with respect to securities loans, dividends and
gains from the sale or other disposition of securities, foreign currencies or
other income derived with respect to its business of investing in such
31
<PAGE>
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 represented by investments in the securities of any one issuer
(other than U.S. Government securities and securities of other investment
companies). Foreign currency gains that are not directly related to the
Portfolio's business of investing in stock or securities is included in the
income that counts toward the 30% gross income requirement described above but
may be excluded by Treasury Regulations from income that counts toward the 90%
of gross income requirement described above. 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.
Under the Code, gains or losses attributable to foreign currency contracts,
or to fluctuations in exchange rates between the time the Portfolio accrues
income or receivables or expenses or other liabilities denominated in a foreign
currency and the time it actually collects such income or pays such liabilities,
are treated as ordinary income or ordinary loss. Similarly, the Fund's share of
gains or losses on the disposition of debt securities held by the Portfolio, if
any, denominated in foreign currency, to the extent attributable to fluctuations
in exchange rates between the acquisition and disposition dates are also treated
as ordinary income or loss.
Gains or losses on sales of securities are treated as long-term capital gains
or losses if the securities have been held for more than one year except in
certain cases where a put has been acquired or a call has been written thereon.
Other gains or losses on the sale of securities are treated as short-term
capital gains or losses. Gains and losses on the sale, lapse or other
termination of options on securities are generally treated as gains and losses
from the sale of securities. If an option written for the Portfolio lapses or is
terminated through a closing transaction, such as a repurchase of the option
from its holder, the Portfolio may realize a short-term capital gain or loss,
depending on whether the premium income is greater or less than the amount paid
in the closing transaction. If securities are sold pursuant to the exercise of a
call option written for them, the premium received would be added to the sale
price of the securities delivered in determining the amount of gain or loss on
the sale. The requirement that less than 30% of the Fund's gross income be
derived from gains from the sale of securities held for less than three months
may limit the Portfolio's ability to write options and engage in transactions
involving stock index futures.
Certain options contracts held for the Portfolio at the end of each fiscal
year are required to be "marked to market" for federal income tax purposes; that
is, treated as having been sold at market value. Sixty percent of any gain or
loss recognized on these deemed sales and on actual dispositions are treated as
long-term capital gain or loss, and the remainder are treated as short-term
capital gain or loss regardless of how long the Portfolio has held such options.
The Portfolio may be required to defer the recognition of losses on stock or
securities to the extent of any unrecognized gain on offsetting positions held
for it.
If shares are purchased by the Portfolio in certain foreign investment
entities, referred to as "passive foreign investment companies", the Fund may be
subject to U.S. federal income tax, and an additional charge in the nature of
interest, on the Fund's portion of any "excess distribution" from such company
or gain from the disposition of
32
<PAGE>
such shares, even if the distribution or gain is paid by the Fund as a dividend
to its shareholders. If the Fund were able and elected to treat a passive
foreign investment company as a "qualified electing fund", in lieu of the
treatment described above, the Fund would be required each year to include in
income, and distribute to shareholders, in accordance with the distribution
requirements set forth above, the Fund's pro rata share of the ordinary earnings
and net capital gains of the company, whether or not distributed to the Fund.
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 distributions. 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 is treated as
long-term capital gain or loss if the shares have been held for more than one
year, and otherwise as short-term capital gain or loss. However, any loss
realized by a shareholder upon the redemption of Fund shares held one year or
less is treated as a long-term capital loss to the extent of any long-term
capital gains distributions received by the shareholder with respect to such
shares. Additionally, any loss realized on a redemption or exchange of Fund
shares is disallowed to the extent the shares disposed of are replaced within a
period of 61 days beginning 30 days before such disposition, such as pursuant to
reinvestment of a dividend or capital gains distribution in Fund shares.
Foreign Taxes. The Fund may be subject to foreign withholding taxes and if
more than 50% of the value of the Fund's share of the Portfolio's total assets
at the close of any fiscal year consists of stock or securities of foreign
corporations, at the election of the Corporation any such foreign income taxes
paid by the Fund may be treated as paid directly by its shareholders. The
Corporation makes such an election only if it deems it to be in the best
interest of the Fund's shareholders and notifies shareholders in writing each
year if it makes the election and of the amount of foreign income taxes, if any,
to be treated as paid by the shareholders. If the Corporation elects to treat
foreign income taxes paid from the Fund as paid directly by the Fund's
shareholders, the Fund's shareholders would be required to include in income
such shareholder's proportionate share of the amount of foreign income taxes
paid by the Fund and would be entitled to claim either a credit or deduction in
such amount. (No deduction is permitted in computing alternative minimum tax
liability). Shareholders who choose to utilize a credit (rather than a
deduction) for foreign taxes are subject to the limitation that the credit may
not exceed the shareholder's U.S. tax (determined without regard to the
availability of the credit) attributable to that shareholder's total foreign
source taxable income. For this purpose, the portion of dividends and capital
gains distributions paid from the Fund from its foreign source income is treated
as foreign source income. The Fund's gains and losses from the sale of
securities are generally treated as derived from U.S. sources, however, and
certain foreign currency gains and losses likewise are treated as derived from
U.S. sources. The limitation of the foreign tax credit is applied separately to
foreign source "passive income", such as the portion of dividends received from
the Fund which qualifies as foreign source income. In addition, the foreign tax
credit is allowed to offset only 90% of the alternative minimum tax imposed on
corporations and individuals. Because of these limitations, a shareholder may be
unable to claim a credit for the full amount of such shareholder's proportionate
share of the foreign income taxes paid from the Fund.
33
<PAGE>
Certain entities, including corporations formed as part of corporate pension
or profit-sharing plans and certain charitable and other organizations described
in Section 501 (c) of the Internal Revenue Code, as amended, that are generally
exempt from federal income taxes may not receive any benefit from the election
by the Corporation to "pass through" foreign income taxes to the Fund's
shareholders.
In certain circumstances foreign taxes imposed with respect to the Fund's
income may not be treated as income taxes imposed on the Fund. Any such taxes
would not be included in the Fund's income, would not be eligible to be "passed
through" to Fund shareholders, and would not be eligible to be claimed as a
foreign tax credit or deduction by Fund shareholders. In particular, in certain
circumstances it may not be clear whether certain amounts of taxes deducted from
gross dividends paid to the Fund would, for U.S. federal income tax purposes, be
treated as imposed on the issuing corporation rather than the Fund.
Other Taxes. The Fund is 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. Distributions to shareholders
may be subject to additional state and local taxes. 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 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 International Equity Fund. The
Board of Directors of the Corporation also has the power to designate one or
more series of shares of common stock and to classify and reclassify any
unissued shares with respect to such series. Currently there are seven such
series in addition to the Fund.
34
<PAGE>
Each share of the Fund represents an equal proportional interest in the Fund
with each other share. Upon liquidation of the Fund, shareholders are entitled
to share pro rata in the net assets of the Fund available for distribution to
shareholders.
Shareholders are entitled to 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 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.
The By-laws of the Corporation provide that the presence in person or
by proxy of the holders of record of one third of the shares of a Fund
outstanding and entitled to vote thereat shall constitute a quorum at all
meetings of shareholders of 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 Portfolio is organized as a trust under the law of the State of New
York. The Portfolio's Declaration of Trust provides that the Fund and other
entities investing in the Portfolio (e.g., other investment companies, insurance
company separate accounts and common and commingled trust funds) are liable for
all obligations of the Portfolio. However, the risk of the Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and the Portfolio itself was unable to meet
its obligations. Accordingly, the Directors of the Corporation believe that
neither the Fund nor its shareholders will be adversely affected by reason of
the investment of all of the Fund's assets in the Portfolio.
Each investor in the Portfolio, including the Fund, may add to or
reduce its investment in the Portfolio on each day the New York Stock Exchange
is open for regular trading. At 4:00 P.M., New York time on each such business
35
<PAGE>
day, the value of each investor's beneficial interest in a Portfolio is
determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents that investor's share of
the aggregate beneficial interests in the Portfolio. Any additions or
withdrawals, which are to be effected on that day, are then effected. The
investor's percentage of the aggregate beneficial interests in the Portfolio is
then recomputed as the percentage equal to the fraction (i) the numerator of
which is the value of such investor's investment in the Portfolio as of 4:00
P.M., New York time on such day plus or minus, as the case may be, the amount of
any additions to or withdrawals from the investor's investment in the Portfolio
effected on such day, and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of 4:00 P.M., New York time on such day plus or
minus, as the case may be, the amount of the net additions to or withdrawals
from the aggregate investments in the Portfolio by all investors in the
Portfolio. The percentage so determined is then applied to determine the value
of the investor's interest in the Portfolio as of 4:00 P.M., New York time on
the following business day of the Portfolio.
Whenever the Corporation is requested to vote on a matter pertaining to the
Portfolio, the Corporation will vote its shares without a meeting of
shareholders of the Fund if the proposal is one, if which made with respect to
the Fund, would not require the vote of shareholders of the Fund, as long as
such action is permissible under applicable statutory and regulatory
requirements. For all other matters requiring a vote, the Corporation will hold
a meeting of shareholders of the Fund and, at the meeting of investors in the
Portfolio, the Corporation will cast all of its votes in the same proportion as
the votes of the Fund's shareholders even if all Fund shareholders did not vote.
Even if the Corporation votes all its shares at the Portfolio meeting, other
investors with a greater pro rata ownership in the Portfolio could have
effective voting control of the operations of the Portfolio.
Stock certificates are not issued by the Corporation.
The Articles of Incorporation of the Corporation contain a provision
permitted under Maryland Corporation Law which under certain circumstances
eliminates the personal liability of the Corporation's Directors to the
Corporation or its shareholders.
The Articles of Incorporation and the By-Laws of the Corporation provide that
the Corporation indemnify the Directors and officers of the Corporation to the
full extent permitted by the Maryland Corporation Law, which permits
indemnification of such persons against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Corporation. However, nothing in the Articles of Incorporation
or the By-Laws of the Corporation protects or indemnifies a Director or officer
of the Corporation against any liability to the Corporation or its shareholders
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.
Interests in the Portfolio have no preference, preemptive, conversion or
similar rights, and are fully paid and non-assessable. Neither Portfolio is
required to hold annual meetings of investors, but will hold special meetings of
investors when, in the judgment of its Trustees, it is necessary or desirable to
submit matters for an investor vote. Each investor is entitled to a vote in
proportion to the share of its investment in the Portfolio.
36
<PAGE>
PORTFOLIO BROKERAGE TRANSACTIONS
================================================================================
The Portfolio is managed actively in pursuit of its investment
objective. Securities are not traded for short-term profits but, when
circumstances warrant, securities are sold without regard to the length of time
held. A 100% turnover would occur, for example, if all portfolio securities
(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 of the Portfolio was 85% and [ %], respectively. The amount of brokerage
commissions and taxes on realized capital gains to be borne by the shareholders
of the Fund tends to increase as the level of portfolio activity increases.
In effecting securities transactions the Investment Adviser seeks to obtain
the best price and execution of orders. All of the transactions for the
Portfolio are executed through qualified brokers other than Brown Brothers
Harriman & Co. In selecting such 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 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.
Research services provided by brokers to which Brown Brothers Harriman & Co.
has allocated brokerage business in the past include economic statistics and
forecasting services, industry and company analyses, portfolio strategy
services, quantitative data, and consulting services from economists and
political analysts. Research services furnished by brokers are used for the
benefit of all the Investment Adviser's clients and not solely or necessarily
for the benefit of the Portfolio. The Investment Adviser believes that the value
of research services received is not determinable nor does such research
significantly reduce its expenses. The Portfolio does not reduce the fee paid to
the Investment Adviser by any amount that might be attributable to the value of
such services.
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.
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.
37
<PAGE>
The Trustees of the Portfolio review regularly the reasonableness of
commissions and other transaction costs incurred for the Portfolio in light of
facts and circumstances deemed relevant from time to time and, in that
connection, receive reports from the Investment Adviser and published data
concerning transaction costs incurred by institutional investors generally.
Over-the-counter purchases and sales are transacted directly with principal
market makers, except in those circumstances in which, in the judgment of the
Investment Adviser, better prices and execution of orders can otherwise be
obtained. If the Portfolio effects a closing transaction with respect to a
futures or option contract, such transaction normally would be executed by the
same broker-dealer who executed the opening transaction. The writing of options
by the Portfolio may be subject to limitations established by each of the
exchanges governing the maximum number of options in each class which may be
written by a single investor or group of investors acting in concert, regardless
of whether the options are written on the same or different exchanges or are
held or written in one or more accounts or through one or more brokers. The
number of options which the Portfolio may write may be affected by options
written by the Investment Adviser for other investment advisory clients. An
exchange may order the liquidation of positions found to be in excess of these
limits, and it may impose certain other sanctions.
The Investment Adviser may direct a portion of the Portfolio's securities
transactions to certain unaffiliated brokers which in turn use a portion of the
commissions they receive from the Portfolio to pay other unaffiliated service
providers on behalf of the Portfolio for services provided for which the
Portfolio would otherwise be obligated to pay. Such commissions paid by the
Portfolio are at the same rate paid to other brokers for effecting similar
transactions in listed equity securities.
On those occasions when Brown Brothers Harriman & Co. deems the purchase or
sale of a security to be in the best interests of the Portfolio as well as other
customers, Brown Brothers Harriman & Co., to the extent permitted by applicable
laws and regulations, may, but is not obligated to, aggregate the securities to
be sold or purchased for the Portfolio with those to be sold or purchased for
other customers in order to obtain best execution, including lower brokerage
commissions, if appropriate. In such event, allocation of the securities so
purchased or sold as well as any expenses incurred in the transaction are made
by Brown Brothers Harriman & Co. in the manner it considers to be most equitable
and consistent with its fiduciary obligations to its customers, including the
Portfolio. In some instances, this procedure might adversely affect the
Portfolio.
ADDITIONAL INFORMATION
================================================================================
As used in this Statement of Additional Information and the Prospectus, the
term "majority of the outstanding voting securities" (as defined in the 1940
Act) currently means the vote of (i) 67% or more of the outstanding voting
securities present at a meeting, if the holders of more than 50% of the
outstanding voting securities are present in person or represented by proxy; or
(ii) more than 50% of the outstanding voting securities, whichever is less.
38
<PAGE>
Fund shareholders receive semi-annual reports containing unaudited
financial statements and annual reports containing financial statements audited
by independent auditors.
Other mutual funds or institutional investors may invest in the
Portfolio on the same terms and conditions as the Fund.
39
<PAGE>
However, these other investors may have different sales commissions and other
operating expenses which may generate different aggregate performance results.
Information concerning other investors in the Portfolio is available from Brown
Brothers Harriman & Co.
The Corporation may withdraw the Fund's investment in the Portfolio as a
result of certain changes in the Portfolio's investment objective, policies or
restrictions or if the Board of Directors of the Corporation determines that it
is otherwise in the best interests of the Fund to do so. Upon any such
withdrawal, the Board of Directors of the Corporation would consider what action
might be taken, including the investment of all of the assets of the Fund in
another pooled investment entity or the retaining of an investment adviser to
manage the Fund's assets in accordance with the Fund's investment policies. In
the event the Directors of the Corporation were unable to accomplish either, the
Directors will determine the best course of action.
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 also contains performance information of the Fund will
be provided without charge to each person receiving this Statement of Additional
Information.
WS5486F
40
<PAGE>
APPENDIX - INTERNATIONAL STATISTICS
<TABLE>
<CAPTION>
Market Gross Domestic
MARKETS - DEVELOPED Capitalization Product Population
-------------- -------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Dollars % of Dollars % of Dollars % of
(Billions) Total* (Billions) Total* Millions) Total*
Japan 2,217 21.9 4,149 22.6 125.2 2.9
United Kingdom 1,936 19.2 1,200 6.5 58.3 1.3
Germany 770 7.6 2,241 12.2 81.6 1.9
France 623 6.2 1,473 8.0 58.0 1.3
Switzerland 555 5.5 268 1.5 7.0 0.2
Netherlands 506 5.0 365 2.0 15.4 0.4
Hong Kong 326 3.2 143 0.8 6.3 0.1
Italy 317 3.1 1,072 5.8 57.2 1.3
Australia 246 2.4 374 2.0 18.1 0.4
Sweden 226 2.2 237 1.3 8.8 0.2
Spain 226 2.2 538 2.9 39.2 0.9
Belgium 140 1.4 247 1.3 10.1 0.2
Singapore 92 0.9 86 0.5 3.0 0.1
Denmark 83 0.8 164 0.9 5.2 0.1
Finland 67 0.7 118 0.6 5.1 0.1
Malaysia 61 0.6 84 0.5 20.1 0.5
Norway 54 0.5 144 0.8 4.4 0.1
Portugal 51 0.5 89 0.5 9.9 0.2
Ireland 43 0.4 64 0.3 3.6 0.1
Austria 31 0.3 216 1.2 8.5 0.2
New Zealand 29 0.3 64 0.3 3.5 0.1
----- ----- ------ ---- ---------
SUBTOTAL - DEVELOPED
EX US/CANADA 8,599 85.1 13,336 72.6 548.5 12.5
----- ----- ------ ---- ---------
</TABLE>
41
<PAGE>
PART C
ITEM 23. EXHIBITS.
(a) (i) Restated Articles of Incorporation of the Registrant.(7)
(ii) Establishment and Designation of Series of The 59 Wall
Street U.S. Equity Fund and The 59 Wall Street Short/
Intermediate Fixed Fund.(7)
(iii) Establishment and Designation of Series of The 59 Wall
Street Small Company Fund.(7)
(iv) Establishment and Designation of Series of The 59 Wall
Street International Equity Fund.(7)
(v) Establishment and Designation of Series of The 59 Wall
Street Short Term Fund. (7)
(vi) Redesignation of series of the The 59 Wall Street Short/
Intermediate Fixed Income Fund as The 59 Wall Street
Inflation-Indexed Securities Fund. (8)
(vi) Establishment and Designation of Series of The 59 Wall
Street Tax-Efficient U.S. Equity Fund. (9)
(b) Amended and Restated By-Laws of the Registrant.(7)
(c) Not Applicable.
(d) (i) Advisory Agreement with respect to The 59 Wall Street
U.S. Equity Fund.(7)
(ii) Advisory Agreement with respect to The 59 Wall Street
Short/Intermediate Fixed Income Fund.(7)
(iii) Form of Advisory Agreement with respect to The 59 Wall
Street Inflation-Indexed Securities Fund.(8)
(iv) Form of Advisory Agreement with respect to The 59 Wall
Street Tax-Efficient U.S. Equity Fund. (9)
(e) Form of Amended and Restated Distribution Agreement.(3)
(f) Not Applicable.
(g) (a) Form of Custody Agreement.(2)
(b) Form of Transfer Agency Agreement.(2)
(h) (i) Amended and Restated Administration Agreement.(6)
(ii) Subadministrative Services Agreement.(6)
(iii) Form of License Agreement.(1)
(iv) Amended and Restated Shareholder Servicing Agreement.(6)
(i) Appendix A to Amended and Restated Shareholder
Servicing Agreement.(9)
(v) Amended and Restated Eligible Institution Agreement.(6)
(ii) Appendix A to Amended and Restated Eligible
Institution Agreement.(9)
(vi) Form of Expense Reimbursement Agreement with respect to
The 59 Wall Street U.S. Equity Fund.(6)
(vii) Form of Expense Reimbursement Agreement with respect to
The 59 Wall Street Short/Intermediate Fixed
Fund.(6)
(viii) Form of Expense Payment Agreement with respect to
The 59 Wall Street Inflation-Indexed Securities Fund.(8)
(ix) Form of Expense Payment Agreement with respect to The
59 Wall Street Tax-Efficient U.S. Equity Fund. (9)
(x) Form of Expense Payment Agreement with respect to The
59 Wall Street International Equity Fund.(10)
(i) Opinion of Counsel (including consent).(2)
(j) Independent auditors' consent.(9)
(k) Not Applicable.
(l) Copies of investment representation letters from initial
shareholders.(2)
(m) Not Applicable.
(n) Financial Data Schedule.(11)
(o) Not Applicable.
<PAGE>
(1)Filed with the initial Registration Statement on July 16, 1990.
(2)Filed with Amendment No. 1 to this Registration Statement on October 9, 1990.
(3)Filed with Amendment No.2 to this Registration Statement on February 14,
1991.
(4)Filed with Amendment No. 5 to this Registration Statement on June 15, 1992.
(5)Filed with Amendment No. 7 to this Registration Statement on March 1, 1993.
(6)Filed with Amendment No.9 to this Registration Statement on
December 30, 1993.
(7)Filed with Amendment No. 24 to this Registration Statement on
February 28, 1996.
(8)Filed with Amendment No. 27 to this Registration Statement on
February 28, 1997.
(9)Filed with Amendment No. 38 to this Registration Statement on
September 21, 1998.
(10)Filed with Amendment No. 40 to this Registration Statement on
December 30, 1998.
(11)To be filed by amendment.
Item 24. Persons Controlled by or Under Common Control with Registrant.
See "Directors and Officers" in the Statement of Additional Information
filed as part of this Registration Statement.
Item 25. Indemnification
Reference is made to Article VII of Registrant's By-Laws and to Section
5 of the Distribution Agreement between the Registrant and 59 Wall Street
Distributors, Inc.
Registrant, its Directors and officers, and persons affiliated with
them are insured against certain expenses in connection with the defense of
actions, suits or proceedings, and certain liabilities that might be imposed as
a result of such actions, suits or proceedings.
Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to Directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, officer of controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Adviser.
The Registrant's investment adviser, Brown Brothers Harriman & Co.
("BBH & Co."), is a New York limited partnership. BBH & Co. conducts a general
banking business and is a member of the New York Stock Exchange, Inc.
To the knowledge of the Registrant, none of the general partners or
officers of BBH & Co. is engaged in any other business, profession, vocation or
employment of a substantial nature.
Item 27. Principal Underwriters.
1. (a) 59 Wall Street Distributors, Inc. ("59 Wall Street
Distributors") and its affiliates, also serves as
administrator and/or distributor to other
registered investment companies.
(b) Set forth below are the names, principal business
addresses and positions of each Director and
officer of 59 Wall Street Distributors. The
principal business address of these individuals is
c/o 59 Wall Street Distributors, Inc., 21 Milk
Street, Boston, MA 02109. Unless otherwise
specified, no officer or Director of 59 Wall
Street Distributors serves as an officer or
Director of the Registrant.
<PAGE>
Position and Offices with Position and Offices
Name 59 Wall Street Distributors with the Registrant
- ------------- --------------------------- --------------------
Philip W. Coolidge Chief Executive President
Officer, President
and Director
John R. Elder Assistant Treasurer Treasurer
Linda T. Gibson Secretary Secretary
Molly S. Mugler Assistant Secretary Assistant Secretary
Christine A. Drapeau -- Assistant Secretary
Linwood C. Downs Treasurer --
Robert Davidoff Director --
CMNY Capital, L.P.
135 East 57th Street
New York, NY 10022
Donald Chadwick Director --
Scarborough & Company
110 East 42nd Street
New York, NY 10017
Leeds Hackett Director --
National Credit
Management Corporation
10155 York Road
Cockeysville, MD 21030
Laurence E. Levine Director --
First International
Capital Ltd.
130 Sunrise Avenue
Palm Beach, FL 33480
(c) Not Applicable.
Item 28. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained at the offices of:
The 59 Wall Street Fund, Inc.
21 Milk Street
Boston, MA 02109
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
(investment adviser, eligible institution
and shareholder servicing agent)
59 Wall Street Distributors, Inc.
21 Milk Street
Boston, MA 02109
(distributor)
59 Wall Street Administrators, Inc.
21 Milk Street
Boston, MA 02109
(subadministrator)
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
(custodian and transfer agent)
<PAGE>
Item 29. Management Services.
Other than as set forth under the caption "Management of the
Corporation" in the Prospectus constituting Part A of the Registration
Statement, Registrant is not a party to any management-related service contract.
Item 30. Undertakings.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly authorized
in the City of Boston, and Commonwealth of Massachusetts on the 11th day of
January 1999.
THE 59 WALL STREET FUND, INC.
By /s/ PHILIP W. COOLIDGE
(Philip W. Coolidge, President)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated above.
Signature Title
/s/ J.V. SHIELDS, JR. Director and Chairman of
(J.V. Shields, Jr.) the Board
/s/ PHILIP W. COOLIDGE President (Principal
(Philip W. Coolidge) Executive Officer)
/s/ EUGENE P. BEARD Director
(Eugene P. Beard)
/s/ DAVID P. FELDMAN Director
(David P. Feldman)
/s/ ARTHUR D. MILTENBERGER Director
(Arthur D. Miltenberger)
/s/ ALAN D. LOWY Director
(Alan D. Lowy)
/S/ JOHN R. ELDER Treasurer
(John R. Elder)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto duly authorized
in Boston, Massachusetts on the 11th day of January, 1999.
INTERNATIONAL EQUITY PORTFOLIO
By /s/PHILIP W. COOLIDGE
(Philip W. Coolidge, President)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated above.
Signature Title
PHILIP W. COOLIDGE* President of the Portfolio
(Philip W. Coolidge)
H.B. ALVORD* Trustee and Chairman of the Board
(H.B. Alvord)
RICHARD L. CARPENTER* Trustee
(Richard L. Carpenter)
CLIFFORD A. CLARK* Trustee
(Clifford A. Clark)
DAVID M. SEITZMAN* Trustee
(David M. Seitzman)
JOHN R. ELDER* Treasurer of the Portfolio
(John R. Elder)
*By: /s/SUSAN JAKUBOSKI
Susan Jakuboski as Attorney-in-Fact pursuant to
Powers of Attorney filed previously.
