As filed with the Securities and Exchange Commission on September 28, 1999
Registration Nos. 33-35827 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. 23
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 46
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) [ ] 60 days after filing pursuant to paragraph (a)(i) [ ] on
(date) pursuant to paragraph (a)(i) [X ] 75 days after filing pursuant to
paragraph (a)(ii) [ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
(par value $.001)
<PAGE>
PROSPECTUS
The 59 Wall Street Opportunities Fund
21 Milk Street, Boston, Massachusetts 02109
The Opportunities Fund is a separate portfolio of The 59 Wall Street Fund,
Inc. Shares of the Fund are offered by this Prospectus. The Fund is designed to
enable investors to participate in the opportunities available in the smaller
capitalization segment of the U.S. equity market.
Brown Brothers Harriman & Co. is the Investment Adviser for the Fund.
[NAME(S)] is/are the Investment Sub-Adviser(s) for the Fund. Shares of the Fund
are offered at net asset value without a sales charge.
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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.
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The date of this Prospectus is [DATE], 1999.
<PAGE>
TABLE OF CONTENTS
Page
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Investment Objective and Strategies 1
Principal Risk Factors 2
Fees and Expenses of the Fund 2
Investment Adviser 3
Investment Sub-Adviser(s) 4
Shareholder Information 5
Additional Investment Information 7
<PAGE>
INVESTMENT OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to provide investors with long-term
maximization of total return, primarily through capital appreciation.
The Fund uses a multi-manager structure. The Investment Adviser generally
manages and oversees the investment activities for the Fund. It is the
Investment Adviser's intention to employ Investment Sub-Adviser(s) to manage the
Fund. The Investment Adviser determines the allocation of the Fund's assets
among those selected Investment Sub-Advisers. The Investment Adviser has
discretion to select, retain and discharge the Investment Sub-Advisers with
approval from the Board of Directors for the Fund. The Investment Adviser may
take these actions at any time without shareholder approval.
The Investment Adviser selects Investment Sub-Adviser(s) based on such
characteristics as style, investment process, performance track record, quality
of management and breadth of resources. Provided the Fund achieves a critical
mass, the Investment Adviser intends to hire multiple Investment Sub-Advisers in
order to blend investment styles (i.e. growth and value), achieve broader
diversification and benefit from an exposure to a variety of investment
techniques. It is anticipated that each Investment Sub-Adviser will use a
combination of quantitative models, along with various fundamental and valuation
criteria, in order to manage the Fund. It is expected that each sub-adviser will
construct diversified portfolios that typically invest in 50 to 250 companies.
The Investment Adviser monitors the performance of each Investment
Sub-Adviser and, to the extent it deems appropriate to achieve the Fund's
investment objective, reallocates assets among the individual Investment
Sub-Advisers or recommends that the Fund employ or terminate particular
Investment Sub-Advisers.
In its judgement, the Investment Adviser has determined that the following
[#] Investment Sub-Adviser(s) are to be retained:
[NAME(S)]
Approximately [ ]% of the Fund's assets are expected to be invested by
[NAME]. [ONE OR TWO SENTENCES ON THAT FIRM'S INVESTMENT PHILOSPOHY, E.G.
TOP-DOWN, VALUE, FUNDAMENTAL FACTORS, ETC.] [REPEAT FOR EACH INVESTMENT
SUB-ADVISER]
Under normal circumstances, the Investment Sub-Advisers intend to fully
invest the assets of the Fund in equity securities of small companies. These
securities consist primarily of common stocks listed on securities exchanges or
traded in the over-the-counter market in the United States, The Investment
Sub-Advisers may also purchase other securities with equity characteristics,
including securities convertible into common stock, trust or limited partnership
interests, rights and warrants.
The Investment Sub-Advisers intend to focus on approximately #### small
companies. These companies have a stock market capitalization of less than $#
billion and more than $### million. The common stocks of these companies
represent approximately ##% of the market value of U.S. equities and have a
total market value of over $## trillion. These companies are generally much
smaller in capitalization than the companies listed in the Standard & Poor's 500
Index. The equity securities of these companies generally offer sufficient
liquidity for use in the Fund.
The Investment Sub-Advisers may purchase put and call options on stock
indexes and may enter into futures contracts on stock indexes for the Fund.
These strategies will be used solely as a hedge against changes in the market
value of portfolio securities or securities intended to be purchased.
PRINCIPAL RISK FACTORS
The principal risks of investing in the Fund 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 the Fund changes daily
based on market conditions and other factors. A shareholder may lose money by
investing in the Fund.
The principal risks of investing in the Fund are:
o Market Risk:
This is the risk that the price of a security will fall due to changing
economic, political or market conditions, or due to a company's individual
situation.
o Small Company Investment Risk:
Investing in equity securities of small companies involves risks not
typically associated with investing in comparable securities of large companies.
The Investment Sub-Advisers invest the assets of the Fund in companies that may
have narrow product lines and limited financial and managerial resources. Since
the market for the equity securities of small companies is often characterized
by less information and liquidity than that for the equity securities of large
companies, the Fund's investments can experience unexpected sharp declines in
their market prices. Therefore, shares of the Fund may be subject to greater
declines in value than shares of equity funds investing in the equity securities
of large companies.
Investments in the Fund are neither insured nor guaranteed by the U.S.
Government. Shares of the Fund are not deposits or obligations of, or guaranteed
by, Brown Brothers Harriman & Co. 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.
FEES AND EXPENSES OF THE FUND
The table below describes the estimated fees and expenses that an
investor may pay if that investor buys and holds shares of the Fund.
SHAREHOLDER FEES
(Fees paid directly from an investor's account)
Maximum Sales Charge (Load)
Imposed on Purchases................................................... None
Maximum Deferred Sales Charge (Load)................................... None
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends........................................ None
Redemption Fee......................................................... None
Exchange Fee........................................................... None
ANNUAL FUND OPERATING EXPENSES
(Expenses that are deducted from Fund assets as a percentage of average net
assets)
Investment Advisory Fees............................................... 1.00%
Distribution (12b-1) Fees.............................................. None
Other Expenses
Administration Fee...................................................0.15%
Shareholder Servicing/Eligible Institution Fee.......................0.25
Other Expenses1......................................................0.30 0.70
---- ----
Total Annual Fund Operating Expenses................................... 1.70%
====
EXAMPLE
This example is intended to help an investor compare the cost of investing
in the Fund to the cost of investing in other mutual funds. The example assumes
that an investor invests $10,000 in the 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 Fund's
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:
1 year.................................................. $ 173
3 years................................................. $ 536
INVESTMENT ADVISER
The Investment Adviser 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 a broad range
of investment management services for customers in the United States and abroad.
At December 31, 1998, it managed total assets of approximately $32 billion.
The Investment Adviser provides investment advice and portfolio management
services to the Fund. Subject to the general supervision of the Board of
Directors of the Corporation, the Investment Adviser recommends one or more
Investment Sub-Advisers to provide a continuous investment program for the Fund
or a portion of the Fund's assets designated from time to time by the Investment
Adviser. The investment program includes investment research, and management
with respect to all securities and investments and cash equivalents for the Fund
or a designated portion of the Fund's assets. The Investment Adviser monitors
the performance of the Investment Sub-Advisers and rigorously evaluates how
effectively each Investment Sub-Adviser has achieved the Fund's investment
objective. Each Investment Sub-Adviser's investment objective is to outperform
the Russell 2000 Index (the benchmark), on a risk adjusted basis, while
consistently adhering to its stated investment policies and objectives. The
Investment Adviser also reports to the Corporation's Board of Directors
regarding the performance and investment procedures of each Investment
Sub-Adviser and assists and consults with each Investment Sub-Adviser in
connection with the Fund's continuous investment program.
[Pursuant to an exemptive order from the SEC, the Investment Adviser,
without shareholder approval, as normally would be required under the Investment
Company Act of 1940, as amended (the "1940 Act"), may replace or add Investment
Sub-Advisers and enter into investment sub-advisory agreements with these
Investment Sub-Advisers upon approval of the Board of Directors. Within sixty
days of the hiring of any new Investment Sub-Adviser or any proposed material
change to a sub-advisory agreement, shareholders will be furnished with an
information statement that contains all information that would be included in a
proxy statement regarding the new Investment Sub-Adviser or investment
sub-advisory agreement, except as modified by exemptive relief. Moreover, the
Investment Adviser will not enter into an investment sub-advisory agreement with
any Investment Sub-Adviser that is an "affiliated person," as defined in the
1940 Act, of the Corporation or the Investment Adviser without shareholder
approval. In addition, whenever an Investment Sub-Adviser is hired or fired, the
Investment Adviser will provide the Board of Directors with information showing
the expected impact on the Investment Adviser's profitability and will report
such impact quarterly.]
Each Investment Sub-Adviser's fees will be paid by the Investment Adviser out
of the advisory fees that it receives from the Fund. Fees paid to an Investment
Sub-Adviser when there are multiple Investment Sub-Advisers will depend upon the
fee rate negotiated with the Investment Adviser and upon the percentage of the
Fund's assets allocated to that Investment Sub-Adviser, which may vary from time
to time. Thus, the basis for fees paid to any such Investment Sub-Adviser will
not be constant, and the relative amounts of fees paid to the various Investment
Sub-Advisers of the Fund will fluctuate. These internal fluctuations, however,
will not affect the total advisory fees paid by the Fund, which will remain
fixed on the terms described below. The Investment Adviser may, however,
determine in its discretion to waive a portion of its fee if internal
fluctuations in the fee to be paid to the Investment Sub-Advisers results in
excess profit to the Investment Adviser. Because the Investment Adviser will pay
each Investment Sub-Adviser's fees out of its own fees from the Fund, there will
not be any "duplication" of advisory fees paid by the Fund.
Shareholders should recognize, however, that in engaging new Investment
Sub-Advisers and entering into sub-advisory agreements, the Investment Adviser
will negotiate fees with those Investment Sub-Advisers and, because these fees
are paid by the Investment Adviser and not directly by the Fund, any fee
reduction negotiated by the Investment Adviser may inure to the Investment
Adviser's benefit and any increase will inure to its detriment. The fees paid to
the Investment Adviser by the Fund and the fees paid to the Investment
Sub-Advisers by the Investment Adviser are considered by the Board in approving
the Fund's advisory and sub-advisory arrangements. Any increase in fees paid by
the Fund to the Investment Adviser would require shareholder approval.
As compensation for the services rendered and related expenses such as
salaries of advisory personnel borne by the Investment Adviser under the
Investment Advisory Agreement, the Fund pays the Investment Adviser an annual
fee, computed daily and payable monthly, equal to 1.00% of the average daily net
assets of the Fund.
SUB-ADVISERS
The Investment Adviser has allocated the assets of the Fund among the
Investment Sub-Advisers listed below. It is anticipated that approximately [#]%
of the Fund's assets are expected to be managed by [NAME] and [#]% of the assets
are expected to be managed by [NAME]. These allocations are expected to deviate
occasionally from these allocation levels, but not significantly.
Each Investment Sub-Adviser has complete discretion to buy and sell
securities for the portion of the portfolio it manages, within the parameters of
the Fund's investment objectives, policies and restrictions, and the more
specific strategies, if any, developed by the Investment Adviser. The Investment
Adviser, however, is ultimately responsible for the Funds' investment
performance because it oversees the Investment Sub-Advisers and recommends their
hiring, termination and replacement, as well as the asset allocation among them.
[TO BE INSERTED - ALL INFORMATION, INCLUDING THAT REQUIRED BY ITEM 6(a)(1)
AND (2) OF FORM N-1A REGARDING THE PORTFOLIO MANAGERS]
SHAREHOLDER INFORMATION
NET ASSET VALUE
The Corporation determines the 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 Fund values its assets on the basis of their market quotations and
valuations provided by independent pricing services. If quotations are not
readily available, the assets are valued at fair value in accordance with
procedures established by the Corporation's Directors.
PURCHASE OF SHARES
The Corporation offers shares of the Fund on a continuous basis at its 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 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 $1,000 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 Fund's Shareholder
Servicing Agent. Such an investor has such shares held directly in the
investor's name on the books of the Corporation and is responsible for arranging
for the payment of the purchase price of Fund shares. The Corporation executes
all purchase orders for initial and subsequent purchases at the net asset value
per share next determined after the Fund's custodian, Brown Brothers Harriman &
Co., 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 the Fund of
$100,000 and a minimum subsequent purchase requirement for the 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 the 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 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
the Fund, either totally or partially, by a distribution in kind of securities
(instead of cash) from the 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 the
Fund's net income and realized net short-term capital gains annually as a
dividend, and substantially all of the 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 the Fund. The
Corporation pays dividends and capital gains distributions to shareholders of
record on the record date.
Unless a shareholder whose shares are held directly in the shareholder's name
on the books of the Corporation elects to have dividends and capital gains
distributions paid in cash, 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 the 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 the Fund
holds its assets. Capital gains distributions are taxable to shareholders as
long-term capital gains, whether paid in cash or reinvested in additional shares
and regardless of the length of time a particular shareholder has held Fund
shares.
Foreign Investors
The Fund is designed for investors who are either citizens of the United
States or aliens subject to United States income tax. Prospective investors who
are not citizens of the United States and who are not aliens subject to United
States income tax are subject to United States withholding tax on the entire
amount of all dividends. Therefore, such investors should not invest in the Fund
since alternative investments are available which would not be subject to United
States withholding tax.
ADDITIONAL INVESTMENT INFORMATION
Historically, the common stocks of small companies have provided investors
with higher long-term returns than the common stocks of large companies as
represented by the Standard & Poor's 500 Index or the Dow Jones Industrial
Average. This superior long-term performance has been achieved in an irregular
fashion as the common stocks of small companies have experienced relatively long
periods of outperformance followed by periods of underperformance. Over the past
40 years, the major periods of outperformance were from 1958 to 1968, from 1973
to 1983 and from late 1990 to mid-1994. Since mid-1994, the common stocks of
small companies have lagged the performance of common stocks of large companies.
RELATIVE PERFORMANCE CYCLE
Jan.1, Jan.1, Jan.1, July 1, Aug. 1, Nov. 1, July 1,
1951 1958 1969 1973 1983 1990 1994
to to to to to to to
Dec.31, Dec.31,June 30,July 31,Oct, 31 June 30, Dec. 31,
1957 1968 1973 1983 1990 1994 1998
------- ------- ------ ------- ------ ------- -------
S&P 500 Index...........+ 178% + 272% +16% +152% +146% +63% +204%
Small Company Stock ......+79% +985% -46% +1,101% +9% +115% +87%
Index(Ibbotson Associates)
Russell 2000 Index*.......n/a n/a n/a n/a +15% +102% +87%
(Index started Dec. 1978)
S&P 600 Index.............n/a n/a n/a n/a n/a +100% +105% (Index started
Jan. 1984)
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Note: Periods shown except for beginning and end points are based on peaks and
troughs of relative performance. * Index comprised of those U.S. stocks ranked
from the 1,001st largest to the 3,000th largest based on market capitalization.
ANNUALIZED TOTAL RETURN JAN. 1, 1951 - DEC. 31, 1998 (Compound Rate) S&P 500
Index.................................................... +13.1% per year Small
Company Stock Index (Ibbotson Associates).................. +14.2% per year
Year 2000 issue. Information technology experts are concerned about computer
systems' ability to process data-related information on and after January 1,
2000. This situation, commonly known as the "Year 2000" issue, could have an
adverse impact on the Fund. The cost of addressing the Year 2000 issue, if
substantial, could adversely affect companies and governments that issue
securities held by the Fund. The Advisers are addressing the Year 2000 issue for
their systems. The Fund has been informed by its other service providers that
they are taking similar measures. Although the Fund does not expect the Year
2000 issue to adversely affect it, the Fund cannot guarantee that the efforts of
the Fund, which are limited to requesting and receiving reports from its service
providers, or the efforts of its service providers to correct the problem will
be successful.
<PAGE>
The 59 Wall Street
Opportunities Fund
SEC file number: 811-[ ]
More information on the Fund is available free upon request, including the
following:
o Annual/Semi-Annual Report
Describes the Fund's performance, lists portfolio holdings and contains a letter
from the Fund's Investment Adviser discussing recent market conditions, economic
trends and Fund strategies that significantly affect the Fund's performance
during the period.
o Statement of Additional Information (SAI)
Provides more details about the 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 Fund's Shareholder Servicing Agent:
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
o By E-mail send your request to:
[email protected]
o On the Internet:
Text-only versions of Fund documents can be viewed online or downloaded from:
Brown Brothers Harriman & Co.
http://www.bbhco.com
SEC
http://www.sec.gov
You can also review or obtain copies by visiting the SEC's Public Reference Room
in Washington, DC or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington, DC 20549-6009. Information on the
operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Opportunities Fund
Prospectus
[ ], 1999
--------
1 "Other Expenses" are based on estimated amounts for the current
fiscal year.
<PAGE>
WS5778.doc
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STATEMENT OF ADDITIONAL INFORMATION
THE 59 WALL STREET OPPORTUNITIES FUND
21 Milk Street, Boston, Massachusetts 02109
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The 59 Wall Street Opportunities Fund (the "Fund") is a separate
portfolio of The 59 Wall Street Fund, Inc. (the "Corporation"), a management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Fund is designed to enable investors to
participate in the opportunities available in the smaller capitalization segment
of the U.S. equity market. The investment objective of the Fund is to provide
investors with long-term maximization of total return, primarily through capital
appreciation. There can be no assurance that the Fund's investment objective
will be achieved.
Brown Brothers Harriman & Co. is the investment adviser (the
"Investment Adviser") of the Fund. The Investment Adviser manages the investment
and reinvestment of the assets of the Fund and continuously reviews, supervises
and administers the Funds' investment programs. The Investment Adviser has
entered into agreements with [NAMES] (the "Investment Sub-Advisers") to act as
Investment Sub-Advisers.
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Prospectus dated [ ], 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 . . . . # #
Investment Restrictions . . . . . . . #
Management
Directors and Officers . . . . . #
Investment Adviser . . . . . . . . . # #
Investment Sub-Advisers . . . #
Administrators. . . . . . . . . . . #
Distributor . . . . . . . . . . . #
Shareholder Servicing Agent,
Financial Intermediaries and Eligible
Institutions . . #
Custodian, Transfer and Dividend Disbursing
Agent . . . . . . . #
Independent Auditors #
Net Asset Value; Redemption in Kind . . . . # #
Table of Contents
Page
Computation of Performance . . . . . . . #
Purchases and Redemptions #
Federal Taxes . . . . . . . . . . . . #
Description of Shares . . . . . . . . . #
Portfolio Brokerage Transactions . . . . #
Additional Information. . . . . . . . . . . . . . . #
Financial Statements . . . . . . . . . #
The date of this Statement of Additional Information is [], 1999.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
- -----------------------------------------------------------------
The following supplements the information contained in the Prospectus
concerning the investment objective, policies and techniques of the Fund.
In response to adverse market, economic, political or other conditions, the
Investment Sub-Advisers may make temporary investments for the Fund that are not
consistent with the investment objective and principal investment strategies of
the Fund. Such investments may prevent the Fund from achieving its investment
objective.
Equity Investments
Equity investments may or may not pay dividends and may or may not
carry voting rights. Common stock occupies the most junior position in a
company's capital structure. Convertible securities entitle the holder to
exchange the securities for a specified number of shares of common stock,
usually of the same company, at specified prices within a certain period of time
and to receive interest or dividends until the holder elects to convert. The
provisions of any convertible security determine its ranking in a company's
capital structure. In the case of subordinated convertible debentures, the
holder's claims on assets and earnings are subordinated to the claims of other
creditors, and are senior to the claims of preferred and common shareholders. In
the case of convertible preferred stock, the holder's claims on assets and
earnings are subordinated to the claims of all creditors and are senior to the
claims of common shareholders.
Hedging Strategies
Options on Stock. For the sole purpose of reducing risk, put and call
options on stocks may be purchased for the Fund, although the current intention
is not to do so in such a manner that more than 5% of the Fund's net assets
would be at risk. A call option on a stock gives the purchaser of the option the
right to buy the underlying stock at a fixed price at any time during the option
period. Similarly, a put option gives the purchaser of the option the right to
sell the underlying stock at a fixed price at any time during the option period.
To liquidate a put or call option position, a "closing sale transaction" may be
made at any time prior to the expiration of the option which involves selling
the option previously purchased. Over-the-counter options ("OTC Options")
purchased are treated as not readily marketable. (See "Investment
Restrictions").
Covered call options may also be sold (written) on stocks, although in
each case the current intention is not to do so. A call option is "covered" if
the writer owns the underlying security.
Options on Stock Indexes. Subject to applicable laws and regulations
and solely as a hedge against changes in the market value of portfolio
securities intended to be purchased, put and call options on stock indexes may
be purchased for the Fund. A stock index fluctuates with changes in the market
values of the stocks included in the index. Examples of stock indexes are the
Standard & Poor's 500 Stock Index (Chicago Board of Options Exchange) and the
New York Stock Exchange Composite Index (New York Stock Exchange) and the
Russell 2000 Index (Chicago Board of Options Exchange).
Options on stock indexes are generally similar to options on stock except
that the delivery requirements are different. Instead of giving the right to
take or make delivery of stock at a fixed price (strike price), an option on a
stock index gives the holder the right to receive a cash exercise settlement
amount equal to (a) the amount, if any, by which the strike price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied by (b)
a fixed index multiplier. Receipt of this cash amount depends upon the closing
level of the stock index upon which the option is based being greater than, in
the case of a call, or less than, in the case of a put, the price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and the strike price of the option expressed in U.S. dollars
times a specified multiple.
The effectiveness of purchasing stock index options as a hedging technique
depends upon the extent to which price movements in the portion of the
securities portfolio being hedged correlate with price movements of the stock
index selected. The value of an index option depends upon future movements in
the level of the overall stock market measured by the underlying index before
the expiration of the option. Accordingly, the successful use of options on
stock indexes is subject to the Investment Sub-Adviser's ability both to select
an appropriate index and to predict future price movements over the short term
in the overall stock market. Brokerage costs are incurred in the purchase of
stock index options and the incorrect choice of an index or an incorrect
assessment of future price movements may result in poorer overall performance
than if a stock index option had not been purchased.
The Corporation may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. It is possible, however,
that illiquidity in the options markets may make it difficult from time to time
for the Corporation to close out its written option positions. Also, the
securities exchanges have established limitations on the number of options which
may be written by an investor or group of investors acting in concert. It is not
contemplated that these position limits will have any adverse impact on the
Fund's portfolio strategies.
Futures Contracts on Stock Indexes. Subject to applicable laws and
regulations and solely as a hedge against changes in the market value of
portfolio securities or securities intended to be purchased, futures contracts
on stock indexes ("Futures Contracts") may be entered into for the Fund.
In order to assure that the Fund is not deemed a "commodity pool" for
purposes of the Commodity Exchange Act, regulations of the Commodity Futures
Trading Commission ("CFTC") require that the Corporation enter into transactions
in futures contracts and options on futures contracts only (i) for bona fide
hedging purposes (as defined in CFTC regulations), or (ii) for non-hedging
purposes, provided that the aggregate initial margin and premiums on such
non-hedging positions does not exceed 5% of the liquidation value of the Fund's
assets.
Futures Contracts provide for the making and acceptance of a cash
settlement based upon changes in the value of an index of stocks and are used to
hedge against anticipated future changes in overall stock market prices which
otherwise might either adversely affect the value of securities held for the
Fund or adversely affect the prices of securities which are intended to be
purchased at a later date. A Futures Contract may also be entered into to close
out or offset an existing futures position.
In general, each transaction in Futures Contracts involves the
establishment of a position which is expected to move in a direction opposite to
that of the investment being hedged. If these hedging transactions are
successful, the futures positions taken would rise in value by an amount which
approximately offsets the decline in value of the portion of the Fund's
investments that is being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not be
achieved or a loss may be realized. There is also the risk of a potential lack
of liquidity in the secondary market.
The effectiveness of entering into Futures Contracts as a hedging
technique depends upon the extent 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 Sub-Adviser's ability both to
select an appropriate index and to predict future price movements over the short
term in the overall stock market. The incorrect choice of an index or an
incorrect assessment of the future price movements over the short term in the
overall stock market may result in a poorer overall performance than if a
Futures Contract had not been purchased. Brokerage costs are incurred in
entering into and maintaining Futures Contracts.
When the Corporation enters into a Futures Contract for the Fund, it may
be initially required to deposit, in a segregated account in the name of the
broker performing in the transaction, an "initial margin" of cash, U.S.
Government securities or other high grade liquid obligations equal to
approximately 3% of the contract amount. Initial margin requirements are
established by the exchanges on which Futures Contracts trade and may, from time
to time, change. In addition, brokers may establish margin deposit requirements
in excess of those required by the exchanges. Initial margin in futures
transactions is different from margin in securities transactions in that initial
margin does not involve the borrowing of funds by a broker's client but is,
rather, a good faith deposit on the Futures Contract which will be returned upon
the proper termination of the Futures Contract. The margin deposits made are
marked to market daily and the Corporation may be required to make subsequent
deposits of cash or eligible securities called "variation margin" for the Fund,
with its futures contract clearing broker, which are reflective of price
fluctuations in the Futures Contract.
Currently, Futures Contracts can be purchased on stock indexes such as the
Standard & Poor's 500 Stock Index (Chicago Board of Options Exchange), the
Russell 2000 Index (Chicago Board of Options Exchange) and the New York Stock
Exchange Composite Index (New York Stock Exchange).
Exchanges may limit the amount by which the price of a Futures Contract
may move on any day. If the price moves equal the daily limit on successive
days, then it may prove impossible to liquidate a futures position until the
daily limit moves have ceased.
Loans of Portfolio Securities
Loans of portfolio securities up to 30% of the total value of the Fund
are permitted. Securities of the Fund may be loaned if such loans are secured
continuously by cash or equivalent liquid securities as collateral or by an
irrevocable letter of credit in favor of the Fund at least equal at all times to
100% of the market value of the securities loaned plus accrued income. By
lending the securities of the Fund, the Fund's income can be increased by the
Fund's continuing to receive income on the loaned securities as well as by the
opportunity for the Fund to receive income on the collateral. All or any portion
of interest earned on invested collateral may be paid to the borrower. Loans are
subject to termination by the Corporation in the normal settlement time,
currently three business days after notice, or by the borrower on one day's
notice. Borrowed securities are returned when the loan is terminated. Any
appreciation or depreciation in the market price of the borrowed securities
which occurs during the term of the loan inures to the Fund and its
shareholders. Reasonable finders' and custodial fees may be paid in connection
with a loan. In addition, all facts and circumstances, including the
creditworthiness of the borrowing financial institution, are considered before a
loan is made and no loan is made in excess of one year. There is the risk that a
borrowed security may not be returned to the Fund. Securities are not loaned to
Brown Brothers Harriman & Co. or to any affiliate of the Corporation or Brown
Brothers Harriman & Co. or to any Sub-Adviser or to any affiliate of a
Sub-Adviser.
Short-Term Investments
Although it is intended that the assets of the Fund stay invested in
the securities described above and in the Prospectus to the extent practical in
light of the Fund's investment objective and long-term investment perspective,
the Fund's assets may be invested in short-term instruments to meet anticipated
expenses or for day-to-day operating purposes and when, in a Investment
Sub-Adviser's opinion, it is advisable to adopt a temporary defensive position
because of unusual and adverse conditions affecting the equity markets. In
addition, when the Fund experiences large cash inflows through additional
investments by its investors or the sale of portfolio securities, and desirable
equity securities that are consistent with its investment objective are
unavailable in sufficient quantities, assets may be held in short-term
investments for a limited time pending availability of such equity securities.
Short-term instruments consist of U.S. dollar denominated: (i) securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities; (ii)
commercial paper; (iii) bank obligations, including negotiable certificates of
deposit, fixed time deposits and bankers' acceptances; and (iv) repurchase
agreements. Time deposits with a maturity of more than seven days are treated as
not readily marketable. At the time the Fund's assets are invested in commercial
paper, bank obligations or repurchase agreements, the issuer must have
outstanding debt rated A or higher by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Corporation ("Standard & Poor's"); or the
issuer's parent corporation, if any, must have outstanding commercial paper
rated Prime-1 by Moody's or A-1 by Standard & Poor's. The assets of the Fund may
be invested in non-U.S. dollar denominated and U.S. dollar denominated
short-term instruments, including repurchase agreements, obligations of the U.S.
Government, its agencies or instrumentalities, commercial paper and bank
obligations (such as certificates of deposit, fixed time deposits, and bankers'
acceptances). Cash is held for the Fund in demand deposit accounts with the
Fund's custodian bank.
U.S. Government Securities
The assets of the Fund may be invested in securities issued by the U.S.
Government, its agencies or instrumentalities. These securities include notes
and bonds issued by the U.S. Treasury, zero coupon bonds and stripped principal
and interest securities.
Restricted Securities
Securities that have legal or contractual restrictions on their resale may
be acquired for the Fund. The price paid for these securities, or received upon
resale, may be lower than the price paid or received for similar securities with
a more liquid market.
Accordingly, the valuation of these securities reflects any limitation on their
liquidity.
Repurchase Agreements
Repurchase agreements may be entered into for the Fund only with a
"primary dealer" (as designated by the Federal Reserve Bank of New York) in U.S.
Government securities. This is an agreement in which the seller (the "Lender")
of a security agrees to repurchase from the Fund the security sold at a mutually
agreed upon time and price. As such, it is viewed as the lending of money to the
Lender. The resale price normally is in excess of the purchase price, reflecting
an agreed upon interest rate. The rate is effective for the period of time
assets of the Fund are invested in the agreement and is not related to the
coupon rate on the underlying security. The period of these repurchase
agreements is usually short, from overnight to one week. 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 Fund always
receives as collateral securities which are issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. Collateral is marked to the
market daily and has a market value including accrued interest at least equal to
100% of the dollar amount invested on behalf of the Fund in each agreement along
with accrued interest. Payment for such securities is made for the Fund only
upon physical delivery or evidence of book entry transfer to the account of
Brown Brothers Harriman & Co. (the "Custodian"). If the Lender defaults, the
Fund might incur a loss if the value of the collateral securing the repurchase
agreement declines and might incur disposition costs in connection with
liquidating the collateral. In addition, if bankruptcy proceedings are commenced
with respect to the Lender, realization upon the collateral on behalf of the
Fund may be delayed or limited in certain circumstances.
When-Issued and Delayed Delivery Securities
Securities may be purchased for the Fund on a when-issued or delayed delivery
basis. For example, delivery and payment may take place a month or more after
the date of the transaction. The purchase price and the interest rate payable on
the securities, if any, are fixed on the transaction date. The securities so
purchased are subject to market fluctuation and no income accrues to the Fund
until delivery and payment take place. At the time the commitment to purchase
securities on a when-issued or delayed delivery basis is made, the transaction
is recorded and thereafter the value of such securities is reflected each day in
determining the Fund's net asset value. At the time of its acquisition, a
when-issued or delayed delivery security may be valued at less than the purchase
price. Commitments for such when-issued or delayed delivery securities are made
only when there is an intention of actually acquiring the securities. On
delivery dates for such transactions, such obligations are met from maturities
or sales of securities and/or from cash flow. If the right to acquire a
when-issued or delayed delivery security is disposed of prior to its
acquisition, the Fund could, as with the disposition of any other portfolio
obligation, incur a gain or loss due to market fluctuation. When-issued or
delayed delivery commitments for the Fund may not be entered into if such
commitments exceed in the aggregate 15% of the market value of its total assets,
less liabilities other than the obligations created by when-issued or delayed
delivery commitments.
INVESTMENT RESTRICTIONS
- -----------------------------------------------------------------
The Fund is operated under the following investment restrictions which
are deemed fundamental policies and may be changed only with the approval of the
holders of a "majority of the Fund's outstanding voting securities" (as defined
in the 1940 Act).
Except that the Corporation may invest all of the Fund's assets in an
open-end investment company with substantially the same investment objective,
policies and restrictions as the Fund, the Corporation, with respect to the
Fund, may not:
(1) borrow money or mortgage or hypothecate its assets, except that in
an amount not to exceed 1/3 of the current value of its net assets, it may
borrow money as a temporary measure for extraordinary or emergency purposes, and
except that it may pledge, mortgage or hypothecate not more than 1/3 of such
assets to secure such borrowings (it is intended that money will be borrowed
only from banks and only either to accommodate requests for the redemption of
Fund shares while effecting an orderly liquidation of portfolio securities or to
maintain liquidity in the event of an unanticipated failure to complete a
portfolio security transaction or other similar situations), 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;
(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;
(10) issue any senior security (as that term is defined in the 1940
Act) if such issuance is specifically prohibited by the 1940 Act or the rules
and regulations promulgated thereunder, provided that collateral arrangements
with respect to options and futures, including deposits of initial deposit and
variation margin, are not considered to be the issuance of a senior security for
purposes of this restriction; or
(11) invest more than 5% of its total assets in the securities or
obligations of any one issuer (other than U.S. Government obligations) or more
than 10% of its total assets in the outstanding voting securities of any one
issuer; provided, however, that up to 25% of its total assets may be invested
without regard to this restriction.
Non-Fundamental Restrictions. 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; or (iii) invest less than 65%
of the value of the total assets of the Fund in the equity securities of
companies with a market capitalization of less than $3 billion and more than
$500 million. For these purposes, equity securities are defined as common stock,
securities convertible into common stock, trust or limited partnership
interests, rights and warrants. These policies are not fundamental and may be
changed without shareholder or investor approval.
The Fund is classified as "diversified" under the 1940 Act, which means
that at least 75% of the Fund's total assets is represented by cash; securities
issued by the U.S. Government, its agencies or instrumentalities; and other
securities limited in respect of any one issuer to an amount no greater than 5%
of the Fund's total assets and not more than 10% of the outstanding voting
securities of such issuer.
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 investment
restrictions relating to any particular investment practice or policy are not
consistent, the Fund will adhere to the more restrictive limitation.
DIRECTORS AND OFFICERS
- -------------------------------------------------------------------
The Corporation's Directors, in addition to supervising the actions of the
Administrator and Distributor of the Corporation, as set forth below, decide
upon matters of general policy with respect to the Corporation.
Because of the services rendered to the Fund by the Investment Adviser and
to the Corporation by the Administrator, the Corporation requires no employees,
and its officers, other than the Chairman, receive no compensation from the
Fund.
The Directors and executive officers of the Corporation, their principal
occupations during the past five years (although their titles may have varied
during the period) and business addresses are:
DIRECTORS OF THE CORPORATION
J.V. SHIELDS, JR.* -- Chairman of the Board and Director; Trustee of
The 59 Wall Street Trust; Trustee of the Portfolios(1) (since October 1999);
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.(2) His business address is Shields &
Company, 140 Broadway, New York, NY 10005.
EUGENE P. BEARD** -- Director; Trustee of The 59 Wall Street Trust;
Trustee of the Portfolios (since October 1999); 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;
Trustee of the Portfolios (since October 1999); 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 3 Tall Oaks Drive, Warren, NJ
07059.
ALAN G. LOWY** -- Director; Trustee of The 59 Wall Street Trust;
Trustee of the Portfolios (since October 1999); 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; Trustee of the Portfolios (since October 1999); Retired; Vice President
and Chief Financial Officer of Richard K. Mellon and Sons; Treasurer of Richard
King Mellon Foundation; Director of Vought Aircraft Corporation (prior to
September 1994), Caterair International (prior to April 1994); Member of
Advisory Committee of Carlyle Group and Pittsburgh Seed Fund and Valuation
Committee of Morgenthaler Venture Funds(3). His business address is Richard K.
Mellon and Sons, P.O. Box RKM, Ligonier, PA 15658.
RICHARD L. CARPENTER** -- Director (since October 1999); Trustee of The
59 Wall Street Trust (since October 1999); Trustee of the Portfolios; Trustee of
Dow Jones Islamic Market Index Portfolio (since March 1999); 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** -- Director (since October 1999); Trustee of The 59
Wall Street Trust (since October 1999); Trustee of the Portfolios; Trustee of
Dow Jones Islamic Market Index Portfolio (since March 1999); 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** -- Director (since October 1999); Trustee of The 59
Wall Street Trust (since October 1999); Trustee of the Portfolios; 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.
J. ANGUS IVORY** -- Director (since October 1999); Trustee of The 59
Wall Street Trust (since October 1999); Trustee of the Portfolios (since October
1999); Trustee of Dow Jones Islamic Market Index Portfolio (since March 1999; )
Director of Brown Brothers Harriman Ltd., subsidiary of Brown Brothers Harriman
& Co.; Director of Old Daily Saddelry; Advisor, RAF Central Fund; Committee
Member, St. Thomas Hospital Pain Clinic (since 1999).
OFFICERS OF THE CORPORATION
PHILIP W. COOLIDGE -- President; Chief Executive Officer and President of
Signature Financial Group, Inc. ("SFG"), 59 Wall Street Distributors, Inc. ("59
Wall Street Distributors") and 59 Wall Street Administrators, Inc. ("59 Wall
Street Administrators").
JAMES E. HOOLAHAN -- Vice President; Senior Vice President of SFG.
JOHN R. ELDER -- Treasurer; Vice President of SFG (since April 1995);
Treasurer of Phoenix Family of Mutual Funds (prior to April 1995).
LINWOOD C. DOWNS -- Assistant Treasurer; Treasurer of SFG, 59 Wall Street
Distributors and 59 Wall Street Administrators.
LINDA T. GIBSON -- Secretary; Senior Vice President and Secretary of SFG;
Secretary of 59 Wall Street Distributors and 59 Wall Street Administrators.
SUSAN JAKUBOSKI*** -- Assistant Treasurer; Assistant Secretary,
Assistant Treasurer and Vice President of SFG and Signature Financial Group
(Grand Cayman) Limited.
MOLLY S. MUGLER -- Assistant Secretary; Vice President and Assistant
Secretary of SFG; Assistant Secretary of 59 Wall Street Distributors and 59 Wall
Street Administrators.
CHRISTINE A. DRAPEAU -- Assistant Secretary; Vice President of SFG
(since January 1996); Paralegal and Compliance Officer, various financial
companies (July 1992 to January 1996); Graduate Student, Bentley College (prior
to December 1994).
- -------------------------
*Mr. Shields is an "interested person" of the Corporation because of his
affiliation with a registered broker-dealer. **These Directors are members of
the Audit Committee of the Corporation. (1) The Portfolios consist of the
following active investment companies: U.S. Money Market Portfolio, U.S. Small
Company Portfolio and International Equity Portfolio. (2) Shields & Company,
Capital Management Associates, Inc. and Flowers Industries, Inc., with which Mr.
Shields is associated, are a registered broker-dealer and a member of the New
York Stock Exchange, a registered investment adviser, and a diversified food
company, respectively.
(3) Richard K. Mellon and Sons, Richard King Mellon Foundation, R.K. Mellon
Family Trusts, Mellon Family Investment Company IV, V and VI and
Aerostructures Corporation, with which Mr. Miltenberger is or has been
associated, are a private foundation, a private foundation, a trust, an
investment company and an aircraft manufacturer, respectively.
Each Director and officer of the Corporation listed above holds the
equivalent position with The 59 Wall Street Trust and the Portfolios. The
address of each officer of the Corporation is 21 Milk Street, Boston,
Massachusetts 02109. Messrs. Coolidge, Hoolahan, Downs 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 serve
as the principal underwriter. Except for Mr. Shields, no Director is an
"interested person" of the Corporation as that term is defined in the 1940 Act.
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) and such base annual fee is allocated among all series of the
Corporation, all series of The 59 Wall Street Trust, and the Portfolios and any
other active Portfolios having the same Board of Trustees based upon their
respective assets. In addition, each series of the Trust and the Corporation,
the Portfolios and any other active Portfolios having the same Board of Trustees
which has commenced operations pays an annual fee to each Director of $1,000.
* The Fund Complex consists of the Corporation, The 59 Wall Street Trust
which currently consists of [four] series and the Portfolios [spell them out
again].
Pension or Aggregate
Retirement Compensation
Compensation Benefits Estimated Annual from Fund
Name of Person, Paid by the Accrued as Benefits upon Complex*Paid
Position Corporation Part of Retirement to Directors
Fund
Expenses
J.V. Shields, Jr., $11,146 none none $31,000
Director
Eugene P. Beard, $10,172 none none $26,000
Director
Richard L. Carpenter, $0 none none $15,000
Director
Clifford A. Clark, $0 none none $15,000
Director
David P. Feldman, $10,172 none none $15,000
Director
J. Angus Ivory, $0 none none $0
Director
Alan G. Lowy, $10,172 none none $26,000
Director
Arthur D. $10,172 none none $26,000
Miltenberger,Director
David M. Seitzman, $0 none none $15,000
Director
By virtue of the responsibilities assumed by Brown Brothers Harriman & Co.
under the Investment Advisory Agreement and the Administration Agreement with
the Corporation (see "Investment Adviser" and "Administrator"), the Corporation
does not require employees other than its officers, and none of its officers
devote full time to the affairs of the Corporation, or, other than the Chairman,
receive any compensation from the Fund. As of August 15, 1999, the Directors and
officers of the Corporation as a group beneficially owned less than 1% of the
outstanding shares of the Corporation.
INVESTMENT ADVISER
- ------------------------------------------------------------------------
Under its Investment Advisory Agreement with the Corporation, subject
to the general supervision of the Corporation's Directors and in conformance
with the stated policies of the Fund, Brown Brothers Harriman & Co. provides
investment advice and portfolio management services to the Fund. The Investment
Adviser's duties under the Investment Advisory Agreement include recommending to
the Board of Directors one or more unaffiliated Investment Sub-Advisers to
provide a continuous investment program for the Fund or a portion of the Fund's
assets designated from time to time by the Investment Adviser, including
investment, research, and management with respect to all securities and
investments and cash equivalents for the Fund or a designated portion of the
Fund's assets. The Investment Adviser also reviews, monitors, and reports to the
Board of Directors regarding the performance and investment procedures of each
Investment Sub-Adviser and assists and consults with each Investment Sub-Adviser
in connection with the Fund's continuous investment program. In addition, the
Investment Adviser maintains books and records with respect to its services
under the Investment Advisory Agreement and furnishes the Board of Directors
with such periodic special reports as the Board may request.
The Investment Advisory Agreement between Brown Brothers Harriman & Co. and
the Corporation is dated August 10, 1999 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 Fund, or by
the Corporation's Directors, and (ii) by a vote of a majority of the Directors
of the Corporation who are not parties to the Investment Advisory Agreement or
"interested persons" (as defined in the 1940 Act) of the Corporation
("Independent Directors"), cast in person at a meeting called for the purpose of
voting on such approval. The Investment Advisory Agreement was most recently
approved by the Independent Directors on August 10, 1999. The Investment
Advisory Agreement terminates automatically if assigned and is terminable at any
time without penalty by a vote of a majority of the Directors of the Corporation
or by a vote of the holders of a "majority of the Fund's outstanding voting
securities" (as defined in the 1940 Act) on 60 days' written notice to Brown
Brothers Harriman & Co. and by Brown Brothers Harriman & Co. on 90 days' written
notice to the Corporation (see "Additional Information"). The investment
advisory fee paid to the Investment Adviser is calculated daily and paid monthly
at an annual rate equal to 1.00% of the Fund's average daily net assets. The
investment advisory services of Brown Brothers Harriman & Co. to the Corporation
are not exclusive under the terms of the Investment Advisory Agreement. Brown
Brothers Harriman & Co. is free to and does render investment advisory services
to others, including other registered investment companies.
Pursuant to a license agreement between the Corporation and Brown Brothers
Harriman & Co. dated September 5, 1990, as amended as of December 15, 1993, the
Corporation may continue to use in its name "59 Wall Street", the current and
historic address of Brown Brothers Harriman & Co. The agreement may be
terminated by Brown Brothers Harriman & Co. at any time upon written notice to
the Corporation upon the expiration or earlier termination of any investment
advisory agreement between the Corporation or any investment company in which a
series of the Corporation invests all of its assets and Brown Brothers Harriman
& Co. Termination of the agreement would require the Corporation to change its
name and the name of the Fund to eliminate all reference to "59 Wall Street"
Pursuant to license agreements between Brown Brothers Harriman & Co. and
each of 59 Wall Street Administrators and 59 Wall Street Distributors (each a
"Licensee"), dated June 22, 1993 and June 8, 1990, respectively, each Licensee
may continue to use in its name "59 Wall Street", the current and historic
address of Brown Brothers Harriman & Co., only if Brown Brothers Harriman & Co.
does not terminate the respective license agreement, which would require the
Licensee to change its name to eliminate all reference to ?59 Wall Street?.
The Glass-Steagall Act prohibits certain financial institutions from
engaging in the business of underwriting, selling or distributing securities and
from sponsoring, organizing or controlling a registered open-end investment
company continuously engaged in the issuance of its shares, such as the Fund.
There is presently no controlling precedent prohibiting financial institutions
such as Brown Brothers Harriman & Co. from performing the investment advisory,
administrative or shareholder servicing/eligible institution functions described
above. If Brown Brothers Harriman & Co. were to terminate its Investment
Advisory Agreement with the Corporation, or were prohibited from acting in such
capacity, it is expected that the Directors of the Corporation would recommend
to the investors that they approve a new investment advisory agreement for the
Fund with another qualified adviser. If Brown Brothers Harriman & Co. were to
terminate its Shareholder Servicing Agreement, Eligible Institution Agreement or
Administration Agreement with the Corporation or were prohibited from acting in
any such capacity, its customers would be permitted to remain shareholders of
the Fund and alternative means for providing shareholder services or
administrative services, as the case may be, would be sought. In such event,
although the operation of the Corporation might change, it is not expected that
any shareholders would suffer any adverse financial consequences. However, an
alternative means of providing shareholder services might afford less
convenience to shareholders.
INVESTMENT SUB-ADVISERS
- ------------------------------------------------------------------------
Each Investment Sub-Adviser makes specific portfolio investments for
that segment of the assets of the Fund under its management in accordance with
the Fund's investment objective and the Investment Sub-Adviser's investment
approach and strategies. Investment Sub-Advisers are employed or terminated by
the Investment Adviser subject to the prior approval by the Board of Directors
of the Corporation. Investment Sub-Advisers are paid by the Investment Adviser
(not the Fund). The Investment Sub-Advisers' activities are subject to general
supervision by the Investment Adviser and the Board of Directors of the
Corporation. Although the Investment Adviser and the Board do not evaluate the
investment merits of the Investment Sub-Adviser's specific securities
selections, they do review the performance of each Investment Sub-Adviser
relative to the selection criteria.
Each of the Investment Sub-Advisory Agreements provides that neither
the Investment Sub-Adviser nor any of its directors, officers, stockholders,
agents or employees shall have any liability to the Fund or any shareholder of
the Fund for any error of judgment, mistake of law, or any loss arising out of
any investment, or for any other act or omission in the performance by the
Investment Sub-Adviser of its duties under the Agreement except for liability
resulting from willful misfeasance, bad faith, or negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under the Agreement. Each of the Investment Sub-Advisory Agreements
continue for the same term as the Investment Advisory Agreement and are subject
to the same requirements for renewal.
ADMINISTRATORS
- ------------------------------------------------------------------------
Brown Brothers Harriman & Co. acts as Administrator of the Corporation.
In its capacity as Administrator of the Corporation, Brown Brothers
Harriman & Co. administers all aspects of the Corporation's operations subject
to the supervision of the Corporation's Directors except as set forth below
under "Distributor". In connection with its responsibilities as Administrator
and at its own expense, Brown Brothers Harriman & Co. (i) provides the
Corporation with the services of persons competent to perform such supervisory,
administrative and clerical functions as are necessary in order to provide
effective administration of the Corporation, including the maintenance of
certain books and records; (ii) oversees the performance of administrative and
professional services to the Corporation by others, including the Fund's
Transfer and Dividend Disbursing Agent; (iii) provides the Corporation with
adequate office space and communications and other facilities; and (iv) prepares
and/or arranges for the preparation, but does not pay for, the periodic updating
of the Corporation's registration statement and the Fund's prospectus, the
printing of such documents for the purpose of filings with the Securities and
Exchange Commission and state securities administrators, and the preparation of
tax returns for the Fund and reports to shareholders and the Securities and
Exchange Commission.
The Administration Agreement between the Corporation and Brown Brothers
Harriman & Co. (dated November 1, 1993) will remain in effect for two years from
such date and thereafter, but only so long as such agreement is specifically
approved at least annually in the same manner as the Investment Advisory
Agreement (see "Investment Adviser"). The Independent Directors most recently
approved the Corporation's Administration Agreement on November 10, 1998. The
Administration Agreement will terminate automatically if assigned by either
party thereto and is terminable by the Corporation at any time without penalty
by a vote of a majority of the Directors of the Corporation, or by a vote of the
holders of a "majority of the Corporation's outstanding voting securities" (as
defined in the 1940 Act) (see "Additional Information"). The 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. and by Brown Brothers Harriman & Co. on 90 days' written notice
to the Corporation.
The administrative fee payable to Brown Brothers Harriman & Co. from
the Fund is calculated daily and payable monthly at an annual rate equal to
0.15% of the Fund's average daily net assets.
Pursuant to a Subadministrative Services Agreement with Brown Brothers
Harriman & Co., 59 Wall Street Administrators performs such subadministrative
duties for the Corporation as are from time to time agreed upon by the parties.
The offices of 59 Wall Street Administrators are located at 21 Milk Street,
Boston, Massachusetts 02109. 59 Wall Street Administrators is a wholly-owned
subsidiary of Signature Financial Group, Inc. ("SFG"). SFG is not affiliated
with Brown Brothers Harriman & Co. 59 Wall Street Administrators'
subadministrative duties may include providing equipment and clerical personnel
necessary for maintaining the organization of the Corporation, participation in
the preparation of documents required for compliance by the Corporation with
applicable laws and regulations, preparation of certain documents in connection
with meetings of Directors and shareholders of the Corporation, and other
functions that would otherwise be performed by the Administrator as set forth
above. For performing such subadministrative services, 59 Wall Street
Administrators receives such compensation as is from time to time agreed upon,
but not in excess of the amount paid to the Administrator from the Fund.
DISTRIBUTOR
- ------------------------------------------------------------------------
59 Wall Street Distributors acts as exclusive Distributor of shares of the
Fund. Its office is located at 21 Milk Street, Boston, Massachusetts 02109. 59
Wall Street Distributors is a wholly-owned subsidiary of SFG. SFG and its
affiliates currently provide administration and distribution services for other
registered investment companies. The Corporation pays for the preparation,
printing and filing of copies of the Corporation's registration statement 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 Fund's
Investment Advisory Agreement (see "Investment Adviser"). The Distribution
Agreement was most recently approved by the Independent Directors of the
Corporation on February 9, 1999. The agreement terminates automatically if
assigned by either party thereto and is terminable with respect to the Fund at
any time without penalty by a vote of a majority of the Directors of the
Corporation or by a vote of the holders of a "majority of the Fund's outstanding
voting securities" (as defined in the 1940 Act) (see "Additional Information").
The Distribution Agreement is terminable with respect to the Fund by the
Corporation's Directors or shareholders of the Fund on 60 days' written notice
to 59 Wall Street Distributors. The agreement is terminable by 59 Wall Street
Distributors on 90 days' written notice to the Corporation.
SHAREHOLDER SERVICING AGENT
- ------------------------------------------------------------------------
The Corporation has entered into a shareholder servicing agreement with
Brown Brothers Harriman & Co. pursuant to which Brown Brothers Harriman & Co.,
as agent for the 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 average daily net assets of the
Fund represented by shares owned during the period for which payment was being
made by shareholders who did not hold their shares with an Eligible Institution.
FINANCIAL INTERMEDIARIES
- ------------------------------------------------------------------------
From time to time, the Fund's Shareholder Servicing Agent enters into
contracts with banks, brokers and other financial intermediaries ("Financial
Intermediaries") pursuant to which a customer of the Financial Intermediary may
place purchase orders for Fund shares through that Financial Intermediary which
holds such shares in its name on behalf of that customer. Pursuant to such
contract, each Financial Intermediary as agent with respect to shareholders of
and prospective investors in the Fund who are customers of that Financial
Intermediary, among other things: provides necessary personnel and facilities to
establish and maintain certain shareholder accounts and records enabling it to
hold, as agent, its customers' shares in its name or its nominee name on the
shareholder records of the Corporation; assists in processing purchase and
redemption transactions; arranges for the wiring of funds; transmits and
receives funds in connection with customer orders to purchase or redeem shares
of the Fund; provides periodic statements showing a customer's account balance
and, to the extent practicable, integrates such information with information
concerning other customer transactions otherwise effected with or through it;
furnishes, either separately or on an integrated basis with other reports sent
to a customer, monthly and annual statements and confirmations of all purchases
and redemptions of Fund shares in a customer's account; transmits proxy
statements, annual reports, updated prospectuses and other communications from
the Corporation to its customers; and receives, tabulates and transmits to the
Corporation proxies executed by its customers with respect to meetings of
shareholders of the Fund. For these services, the Financial Intermediary
receives such fees from the Shareholder Servicing Agent as may be agreed upon
from time to time between the Shareholder Servicing Agent and such Financial
Intermediary.
ELIGIBLE INSTITUTIONS
- ------------------------------------------------------------------------
The Corporation enters into eligible institution agreements with banks,
brokers and other financial institutions pursuant to which each financial
institution, as agent for the Corporation with respect to shareholders of and
prospective investors in the Fund who are customers with that financial
institution, among other things: provides necessary personnel and facilities to
establish and maintain certain shareholder accounts and records enabling it to
hold, as agent, its customers' shares in its name or its nominee name on the
shareholder records of the Corporation; assists in processing purchase and
redemption transactions; arranges for the wiring of funds; transmits and
receives funds in connection with customer orders to purchase or redeem shares
of the Fund; provides periodic statements showing a customer's account balance
and, to the extent practicable, integrates such information with information
concerning other customer transactions otherwise effected with or through it;
furnishes, either separately or on an integrated basis with other reports sent
to a customer, monthly and annual statements and confirmations of all purchases
and redemptions of Fund shares in a customer's account; transmits proxy
statements, annual reports, updated prospectuses and other communications from
the Corporation to its customers; and receives, tabulates and transmits to the
Corporation proxies executed by its customers with respect to meetings of
shareholders of the Fund. For these services, each financial institution
receives from the Fund an annual fee, computed daily and payable monthly, equal
to 0.25% of the average daily net assets of the Fund represented by shares owned
during the period for which payment was being made by customers for whom the
financial institution was the holder or agent of record.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
- ------------------------------------------------------------------------
Brown Brothers Harriman & Co. (the "Custodian"), 59 Wall Street, New York,
New York 10005, is the Custodian for the Fund and State Street Bank and Trust
Company ("State Street"), 225 Franklin Street, P.O. Box 351, Boston,
Massachusetts, 02110, is the Transfer and Dividend Disbursing Agent for the
Fund.
As Custodian for the Fund, Brown Brothers Harriman & Co. is responsible for
maintaining books and records of the Fund's portfolio transactions and holding
the Fund's portfolio securities and cash pursuant to a custodian agreement with
the Corporation. Cash is held for the Fund in demand deposit accounts at the
Custodian. Subject to the supervision of the Administrator 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, State Street is responsible for maintaining the books and
records detailing the ownership of the Fund's shares.
INDEPENDENT AUDITORS
- ----------------------------------------------------------------------
Deloitte & Touche LLP, Boston, Massachusetts are the independent auditors
for the Fund.
NET ASSET VALUE; REDEMPTION IN KIND
- ----------------------------------------------------------------------
The net asset value of each of the Fund's shares is determined each day
the New York Stock Exchange is open for regular trading. (As of the date of this
Statement of Additional Information, such Exchange is so open every weekday
except for the following holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas.) This determination of net asset value of each
share of the Fund is made once during each such day as of the close of regular
trading on such Exchange by subtracting from the value of the Fund's total
assets the amount of its liabilities, including expenses payable or accrued, and
dividing the difference by the number of shares of the Fund outstanding at the
time the determination is made.
The value of investments listed on a domestic securities exchange is
based on the last sale prices as of the regular close of the New York Stock
Exchange (which is currently 4:00 p.m., New York time) or, in the absence of
recorded sales, at the average of readily available closing bid and asked prices
on such Exchange.
Unlisted securities are valued at the average of the quoted bid and
asked prices in the over-the-counter market. The value of each security for
which readily available market quotations exist is based on a decision as to the
broadest and most representative market for such security.
Securities or other assets for which market quotations are not readily
available are valued at fair value in accordance with procedures established by
and under the general supervision and responsibility of the Corporation's
Directors. 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 Directors.
Subject to the Corporation's compliance with applicable regulations,
the Corporation has reserved the right to pay the redemption price of shares of
a Fund, either totally or partially, by a distribution in kind of portfolio
securities (instead of cash). The securities so distributed would be valued at
the same amount as that assigned to them in calculating the net asset value for
the shares being sold. If a shareholder received a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash. The Corporation has elected, however, to be governed by Rule 18f-1
under the 1940 Act, as a result of which the Corporation is obligated with
respect to any one investor during any 90 day period to redeem shares of a Fund
solely in cash up to the lesser of $250,000 or 1% of that Fund's net assets at
the beginning of such 90 day period.
COMPUTATION OF PERFORMANCE
- ----------------------------------------------------------------------
The average annual total return of the Fund is calculated for any
period by (a) dividing (i) the sum of the aggregate net asset value per share on
the last day of the period of shares purchased with a $1,000 payment on the
first day of the period and the aggregate net asset value per share on the last
day of the period of shares purchasable with dividends and capital gains
distributions declared during such period with respect to shares purchased on
the first day of such period and with respect to shares purchased with such
dividends and capital gains distributions, by (ii) $1,000, (b) raising the
quotient to a power equal to 1 divided by the number of years in the period, and
(c) subtracting 1 from the result.
The total rate of return of the Fund for any specified period is
calculated by (a) dividing (i) the sum of the aggregate net asset value per
share on the last day of the period of shares purchased with a $1,000 payment on
the first day of the period and the aggregate net asset value per share on the
last day of the period of shares purchasable with dividends and capital gains
distributions declared during such period with respect to shares purchased on
the first day of such period and with respect to shares purchased with such
dividends and capital gains distributions, by (ii) $1,000, and (b) subtracting 1
from the result.
Performance calculations should not be considered a representation of
the average annual or total rate of return of the Fund in the future since the
rates of return are not fixed. Actual total rates of return and average annual
rates of return depend on changes in the market value of, and dividends and
interest received from, the investments held by the Fund and the Fund's expenses
during the period.
Total and average annual rate of return information may be useful for
reviewing the performance of the Fund and for providing a basis for comparison
with other investment alternatives. However, unlike bank deposits or other
investments which pay a fixed yield for a stated period of time, the Fund's
total rate of return fluctuates, and this should be considered when reviewing
performance or making comparisons.
The Fund's performance may be used from time to time in shareholder reports
or other communications to shareholders or prospective investors. Performance
figures are based on historical earnings and are not intended to indicate future
performance. Performance information may include the Fund's investment results
and/or comparisons of its investment results to various unmanaged indexes (such
as the Standard & Poor's 600 Index and the Russell 2000 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.
PURCHASES AND REDEMPTIONS
- ------------------------------------------------------------------------
A confirmation of each purchase and redemption transaction is issued on
execution of that transaction.
The Corporation reserves the right to discontinue, alter or limit the
automatic reinvestment privilege at any time, but will provide shareholders
prior written notice of any such discontinuance, alteration or limitation.
A shareholder's right to receive payment with respect to any redemption
may be suspended or the payment of the redemption proceeds postponed: (i) during
periods when the New York Stock Exchange is closed for other than weekends and
holidays or when regular trading on such Exchange is restricted as determined by
the Securities and Exchange Commission by rule or regulation, (ii) during
periods in which an emergency exists which causes disposal of, or evaluation of
the net asset value of, portfolio securities to be unreasonable or
impracticable, or (iii) for such other periods as the Securities and Exchange
Commission may permit.
An investor should be aware that redemptions from the Fund may not be
processed if a completed account application with a certified taxpayer
identification number has not been received.
In the event a shareholder redeems all shares held in the Fund, future
purchases of shares of the Fund by such shareholder would be subject to the
Fund's minimum initial purchase requirements.
The value of shares redeemed may be more or less than the shareholder's
cost depending on Fund performance during the period the shareholder owned such
shares.
FEDERAL TAXES
- ------------------------------------------------------------------------
Each year, the Corporation intends to continue to qualify the Fund and
elect that the Fund be treated as a separate "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly,
the Fund is not subject to federal income taxes on its net income and realized
net long-term capital gains in excess of net short-term capital losses that are
distributed to its shareholders. A 4% non-deductible excise tax is imposed on
the Fund to the extent that certain distribution requirements for the Fund for
each calendar year are not met. The Corporation intends to continue to meet such
requirements. Under Subchapter M of the Code the Fund is not subject to federal
income taxes on amounts distributed to shareholders.
Qualification as a regulated investment company under the Code
requires, among other things, that (a) at least 90% of the Fund's annual gross
income, without offset for losses from the sale or other disposition of
securities, be derived from interest, payments with respect to securities loans,
dividends and gains from the sale or other disposition of securities, foreign
currencies or other income derived with respect to its business of investing in
such securities; (b) less than 30% of the Fund's annual gross income be derived
from gains (without offset for losses) from the sale or other disposition of
securities held for less than three months; and (c) the holdings of the Fund be
diversified so that, at the end of each quarter of its fiscal year, (i) at least
50% of the market value of the Fund's assets be represented by cash, U.S.
Government securities and other securities limited in respect of any one issuer
to an amount not greater than 5% of the Fund's assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of the
Fund's assets be invested in the securities of any one issuer (other than U.S.
Government securities and securities of other investment companies). In
addition, in order not to be subject to federal income tax, at least 90% of the
Fund's net investment income and net short-term capital gains earned in each
year must be distributed to the Fund's shareholders.
Dividends paid from the Fund may be eligible for the dividends-received
deduction allowed to corporate shareholders because all or a portion of the
Fund's net income may consist of dividends paid by domestic corporations.
Gains or losses on sales of securities 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 Fund lapses or is
terminated through a closing transaction, such as a repurchase of the option
from its holder, the Fund may realize a short-term capital gain or loss,
depending on whether the premium income is greater or less than the amount paid
in the closing transaction. If securities are sold 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 ability to write options and engage in transactions involving
stock index futures.
Certain options contracts held for the Fund at the end of each fiscal year
are required to be "marked to market" for federal income tax purposes; that is,
treated as having been sold at market value. Sixty percent of any gain or loss
recognized on these deemed sales and on actual dispositions are treated as
long-term capital gain or loss, and the remainder are treated as short-term
capital gain or loss regardless of how long such options were held. The Fund may
be required to defer the recognition of losses on stock or securities to the
extent of any unrecognized gain on offsetting positions held for it.
Return of Capital. Any dividend or capital gains distribution has the
effect of reducing the net asset value of Fund shares held by a shareholder by
the same amount as the dividend or capital gains distribution. If the net asset
value of shares is reduced below a shareholder's cost as a result of a dividend
or capital gains distribution from the Fund, such dividend or capital gains
distribution would be taxable even though it represents a return of invested
capital.
Redemption of Shares. Any gain or loss realized on the redemption of Fund
shares by a shareholder who is not a dealer in securities is treated as
long-term capital gain or loss if the shares have been held for more than one
year, and otherwise as short-term capital gain or loss. However, any loss
realized by a shareholder upon the redemption of Fund shares held one year or
less is treated as a long-term capital loss to the extent of any long-term
capital gains distributions received by the shareholder with respect to such
shares. Additionally, any loss realized on a redemption or exchange of Fund
shares is disallowed to the extent the shares disposed of are replaced within a
period of 61 days beginning 30 days before such disposition, such as pursuant to
reinvestment of a dividend or capital gains distribution in Fund shares.
Other Taxes. The Fund may be subject to state or local taxes in
jurisdictions in which it is deemed to be doing business. In addition, the
treatment of the Fund and its shareholders in those states which have income tax
laws might differ from treatment under 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
Articles of Incorporation currently permit the Corporation to issue
2,500,000,000 shares of common stock, par value $0.001 per share, of which
25,000,000 shares have been classified as shares of The 59 Wall Street
Opportunities Fund. The Board of Directors of the Corporation may increase the
number of shares the Corporation is authorized to issue without the approval of
shareholders. The Board of Directors of the Corporation also has the power to
designate one or more series of shares of common stock and to classify and
reclassify any unissued shares with respect to such series. Currently there are
eight such series in addition to the Fund.
Each share of the Fund represents an equal proportional interest in the
Fund with each other share. Upon liquidation of the Fund, shareholders are
entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.
Shareholders of the Fund are entitled to a full vote for each full share
held and to a fractional vote for fractional shares. 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, when issued, are fully paid
and non-assessable by the Corporation.
Stock certificates are not issued by the Corporation.
The By-Laws of the Corporation provide that the presence in person or by
proxy of the holders of record of one third of the shares of the Fund
outstanding and entitled to vote thereat shall constitute a quorum at all
meetings of Fund shareholders, except as otherwise required by applicable law.
The By-Laws further provide that all questions shall be decided by a majority of
the votes cast at any such meeting at which a quorum is present, except as
otherwise required by applicable law.
The Corporation's Articles of Incorporation provide that, at any meeting of
shareholders of the Fund, each Eligible Institution may vote any shares as to
which that Eligible Institution is the agent of record and which are otherwise
not represented in person or by proxy at the meeting, proportionately in
accordance with the votes cast by holders of all shares otherwise represented at
the meeting in person or by proxy as to which that Eligible Institution is the
agent of record. Any shares so voted by an Eligible Institution are deemed
represented at the meeting for purposes of quorum requirements.
The Articles of Incorporation and the By-Laws of the Corporation provide
that the Corporation indemnify the Directors and officers of the Corporation to
the full extent permitted by the Maryland Corporation Law, which permits
indemnification of such persons against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Corporation. However, nothing in the Articles of Incorporation
or the By-Laws of the Corporation protects or indemnifies a Director or officer
of the Corporation against any liability to the Corporation or its shareholders
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.
The Corporation may, in the future, seek to achieve the Fund's investment
objective by investing all of the Fund's investable assets in a no-load,
diversified, open-end management investment company having substantially the
same investment objective as those applicable to the Fund. In such event, the
Fund would no longer directly require investment advisory services and therefore
would pay no investment advisory fees. Further, the administrative services fee
paid from the Fund would be reduced. Such an investment would be made only if
the Directors believe that the aggregate per share expenses of the Fund and such
other investment company would be less than or approximately equal to the
expenses which the Fund would incur if the Corporation were to continue to
retain the services of an investment adviser for the Fund and the assets of the
Fund were to continue to be invested directly in portfolio securities.
It is expected that the investment of the Fund in another investment
company will have no preference, preemptive, conversion or similar rights, and
will be fully paid and non-assessable. It is expected that the investment
company will not be required to hold annual meetings of investors, but will hold
special meetings of investors when, in the judgment of its trustees, it is
necessary or desirable to submit matters for an investor vote. It is expected
that each investor will be entitled to a vote in proportion to the share of its
investment in such investment company. Except as described below, whenever the
Corporation is requested to vote on matters pertaining to the investment
company, the Corporation would hold a meeting of the Fund's shareholders and
would cast its votes on each matter at a meeting of investors in the investment
company proportionately as instructed by the Fund's shareholders.
PORTFOLIO BROKERAGE TRANSACTIONS
- ------------------------------------------------------------------------
Securities are not traded for short-term profits but, when circumstances
warrant, securities are sold without regard to the length of time held. A 100%
annual turnover rate would occur, for example, if all portfolio securities
(excluding short-term obligations) were replaced once in a period of one year.
The amount of brokerage commissions and taxes on realized capital gains to be
borne by the shareholders of the Fund tend to increase as the level of portfolio
activity increases. In effecting securities transactions for the Fund, the
Investment Sub-Advisers seek to obtain the best price and execution of orders.
In selecting a broker, the Investment Sub-Advisers consider a number of factors
including: the broker's ability to execute orders without disturbing the market
price; the broker's reliability for prompt, accurate confirmations and on-time
delivery of securities; the broker's financial condition and responsibility; the
research and other investment information provided by the broker; and the
commissions charged. Accordingly, the commissions charged by any such broker may
be greater than the amount another firm might charge if the Investment
Sub-Advisers determine in good faith that the amount of such commissions is
reasonable in relation to the value of the brokerage services and research
information provided by such broker. Portfolio securities are not purchased from
or sold to the Administrator, Distributor, Investment Adviser or an Investment
Sub-Adviser or any "affiliated person" (as defined in the 1940 Act) of the
Administrator, Distributor, Investment Adviser or Investment Sub-Adviser when
such entities are acting as principals, except to the extent permitted by law.
Brown Brothers Harriman & Co. acts as one of the principal brokers for the Fund
in the purchase and sale of securities when, in the judgment of the Investment
Adviser and/or an Investment Sub-Adviser, that firm will be able to obtain a
price and execution at least as favorable as other qualified brokers. As one of
the principal brokers for the Fund, Brown Brothers Harriman & Co. receives
brokerage commissions from the Fund The use of Brown Brothers Harriman & Co. as
a broker for the Fund is subject to the provisions of Rule 11a2-2(T) under the
Securities Exchange Act of 1934 which permits the Fund to use Brown Brothers
Harriman & Co. as a broker provided that certain conditions are met. In
addition, under the 1940 Act, commissions paid by the Fund to Brown Brothers
Harriman & Co. in connection with a purchase or sale of securities offered on a
securities exchange may not exceed the usual and customary broker's commission.
The Directors of the Corporation from time to time review, among other things,
information relating to the commissions charged by Brown Brothers Harriman & Co.
to the Fund and to its other customers and information concerning the prevailing
level of commissions charged by other qualified brokers. In addition, the
procedures pursuant to which Brown Brothers Harriman & Co. effects brokerage
transactions for the Fund are reviewed and approved no less often than annually
by a majority of the non-interested Directors of the Corporation. A portion of
the transactions for the Fund are executed through qualified brokers other than
Brown Brothers Harriman & Co. In selecting such brokers, the Investment
Sub-Advisers may consider the research and other investment information provided
by such brokers. Research services provided by brokers to which the Investment
Sub-Advisers have 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 an Investment Sub-Adviser's clients and not solely or necessarily
for the benefit of the Fund. The Investment Sub-Advisers believe that the value
of research services received is not determinable nor does such research
significantly reduce its expenses. The Corporation does not reduce the fee paid
by the Fund to the Investment Adviser by any amount that might be attributable
to the value of such services. The Investment Sub-Advisers may direct a portion
of the Fund's securities transactions to certain unaffiliated brokers which in
turn use a portion of the commissions they receive from the Fund to pay other
unaffiliated service providers on behalf of the Fund for services provided for
which the Corporation would otherwise be obligated to pay. Such commissions paid
by the Fund are at the same rate paid to other brokers for effecting similar
transactions in listed equity securities. The Directors of the Corporation
review regularly the reasonableness of commissions and other transaction costs
incurred for the Fund in light of facts and circumstances deemed relevant from
time to time and, in that connection, receive reports from the Investment
Adviser and/or the Investment Sub-Advisers and published data concerning
transaction costs incurred by institutional investors generally.
Miscellaneous
Over-the-counter purchases and sales are transacted directly with
principal market makers, except in those circumstances in which, in the judgment
of an Investment Sub-Adviser, better prices and execution of orders can
otherwise be obtained. If the Corporation effects a closing transaction with
respect to a futures or option contract, such transaction normally would be
executed by the same broker-dealer who executed the opening transaction. The
writing of options by the Corporation may be subject to limitations established
by each of the exchanges governing the maximum number of options in each class
which may be written by a single investor or group of investors acting in
concert, regardless of whether the options are written on the same or different
exchanges or are held or written in one or more accounts or through one or more
brokers. The number of options which the Corporation may write may be affected
by options written by the Investment Sub-Adviser for other investment advisory
clients. An exchange may order the liquidation of positions found to be in
excess of these limits, and it may impose certain other sanctions.
ADDITIONAL INFORMATION
- ---------------------------------------------------------------
As used in this Statement of Additional Information and the Prospectus,
the term "majority of the Fund's outstanding voting securities" (as defined in
the 1940 Act) currently means the vote of (i) 67% or more of the Fund's shares
present at a meeting, if the holders of more than 50% of the Fund's outstanding
voting securities are present in person or represented by proxy; or (ii) more
than 50% of the Fund's outstanding voting securities, whichever is less.
Fund shareholders receive semi-annual reports containing unaudited
financial statements and annual reports containing financial statements audited
by independent auditors.
With respect to the securities offered by the Prospectus, this
Statement of Additional Information and the Prospectus do not contain all the
information included in the Registration Statement filed with the Securities and
Exchange Commission under the Securities Act of 1933. Pursuant to the rules and
regulations of the Securities and Exchange Commission, certain portions have
been omitted. The Registration Statement including the exhibits filed therewith
may be examined at the office of the Securities and Exchange Commission in
Washington, D.C.
Statements contained in this Statement of Additional Information and
the Prospectus concerning the contents of any contract or other document are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement. Each such statement is qualified in all respects by such reference.
WS5778
<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)
(vii) Establishment and Designation of Series of The 59 Wall
Street Tax-Efficient U.S. Equity Fund. (9)
(viii) Establishment and Designation of Series of The 59 Wall Street
Opportunities Fund. (12)
(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)
(v) Form of Advisory Agreement with respect to The 59 Wall
Street Opportunities Fund. (12)
(vi) Form of Sub-Advisory Agreement with respect to The 59
Wall Street Opportunities Fund. (12)
(e) Form of Amended and Restated Distribution Agreement.(3)
(f) Not Applicable.
(g) (i) Form of Custody Agreement.(2)
(ii) 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)
(a) Appendix A to Amended and Restated Shareholder
Servicing Agreement.(9)
(b) Appendix A to Amended and Restated Shareholder
Servicing Agreement. (12)
(v) Amended and Restated Eligible Institution Agreement.(6)
(a) Appendix A to Amended and Restated Eligible
Institution Agreement.(9)
(b) Appendix A to Amended and Restated Eligible
Institution Agreement. (12)
(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 Income 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.(11)
(k) Not Applicable.
(l) Copies of investment representation letters from initial
shareholders.(2)
(i) Form of investment representation letter from initial
shareholders of The 59 Wall Street Opportunities Fund.(12)
(m) Not Applicable.
(n) Not Applicable.
17 Financial Data Schedule.(11)
<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)Filed with Amendment No.43 to this Registration Statement on February 26,
1999.
(12) Filed herewith.
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
Susan Jakuboski Assistant Treasurer Assistant Treasurer
Linwood C. Downs Treasurer Assistant 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 [ ] day of
August, 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 and Principal
(John R. Elder) Accounting Officer
<PAGE>
INDEX TO EXHIBITS
EX-99.B5(a) Form of Investment Advisory Agreement(Opportunities Fund)
EX-99.B5(b) Form of Subadvisory Agreement (0pportunities Fund)
EX-99.B9(a) Appendix A to Shareholder Servicing Agreement
EX-99.B9(b) Appendix A to Eligible Institution Agreement
THE 59 WALL STREET FUND, INC.
INVESTMENT ADVISORY AGREEMENT
THE 59 WALL STREET OPPORTUNITIES FUND
AGREEMENT, made on the 10th day of August, 1999, between THE 59 WALL
STREET FUND, INC., a Maryland corporation (the "Corporation"), on behalf of The
59 Wall Street Opportunities Fund (the "Fund"), and BROWN BROTHERS HARRIMAN &
CO., a New York limited partnership (the "Adviser"),
WHEREAS, the Corporation is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the " 1940
Act"); and
WHEREAS, the Corporation desires to retain the Adviser to render
investment advisory services to the Fund, and the Adviser is willing to render
such services;
NOW, THEREFORE, this Agreement
WITNESSETH:
that in consideration of the premises and mutual promises hereinafter set forth,
the parties hereto agree as follows:
1. The Corporation hereby appoints the Adviser to act as investment adviser to
the Fund for the period and on the terms set forth in this Agreement. The
Adviser accepts such appointment and agrees to render the services herein
set forth, for the compensation herein provided.
2. Subject to the general supervision of the Directors of the Corporation, the
Adviser shall manage the investment operations of the Fund and the
composition of the Fund's portfolio of securities and investments,
including cash, the purchase, retention and disposition thereof and
agreements relating thereto, in accordance with the Fund's investment
objective and policies as stated in the Prospectus (as defined in paragraph
3 of this Agreement) and subject to the following understandings:
(a) The Adviser shall have overall responsibility for the general
management and investment of the assets and securities
portfolios of the Fund.
(b) The Adviser may delegate its investment responsibilities under
sub-paragraph 2(a) with respect to the Fund, or such segments
thereof designated by the Adviser, to one or more persons or
companies ("Sub-Advisers") pursuant to an agreement between the
Adviser and each such Sub-Adviser (the "Investment Sub-Advisory
Agreement"). Each Investment Sub-Advisory Agreement may provide
that the Sub-Adviser, subject to the control and supervision of
the Corporation's Board of Directors and the Adviser, shall have
full investment discretion for the Fund and shall make all
determinations with respect to the investment of the Fund's
assets assigned to the Sub-Adviser and the purchase and sale of
portfolio securities with those assets, and such steps as may be
necessary to implement its decision. Any delegation of duties
pursuant to this paragraph shall comply with any applicable
provisions of Section 15 of the 1940 Act, except to the extent
permitted by any exemptive order of the Securities and Exchange
Commission or similar relief. The Adviser shall not be
responsible or liable for the investment merits of any decision
by a Sub-Adviser to purchase, hold or sell a security for the
Fund's portfolio. (c) The Adviser shall develop overall
investment programs and strategies for the Fund, or segments
thereof, shall revise such programs as necessary, and shall
monitor and report periodically implementation of the programs.
(d) The Adviser shall research and evaluate Sub-Advisers and shall
advise the Corporation's Directors of the Sub-Advisers which the
Adviser believes are best-suited to invest the assets of the
Fund; shall monitor and evaluate the investment performance of
each Sub-Adviser; shall recommend changes or additions of
Sub-Advisers when appropriate; and shall coordinate the
investment activities of the Sub-Advisers.
(e) The Adviser shall be solely responsible for paying the fees of
each Sub-Adviser.
(f) The Adviser shall render to the Corporation's Board of Directors
such periodic reports concerning the business and investments of
the Fund as the Board of Directors shall reasonably request.
(g) The Adviser, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the
Corporation's Articles of Incorporation and By-Laws and the
Prospectus of the Fund and with the instructions and directions
of the Directors of the Corporation and will conform to and
comply with the requirements of the 1940 Act and all other
applicable federal and state laws and regulations including,
without limitation, the regulations and rulings of the New York
State Banking Department;
(h) Each Sub-Adviser shall determine a portion of the securities to
be purchased, sold or lent by the Corporation and as agent for
the Fund will effect portfolio transactions pursuant to its
determinations either directly with the issuer or with any broker
and/or dealer in such securities; in placing orders with brokers
and or dealers each Sub-Adviser intends to seek best price and
execution for purchases and sales; each Sub-Adviser shall also
make recommendations regarding whether or not the Corporation
shall enter into repurchase or reverse repurchase agreements and
interest rate futures contracts.
On occasions when a Sub-Adviser deems the purchase or sale of
a security to be in the best interest of the Fund as well as
other customers, that Sub-Adviser may, to the extent permitted
by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be so sold or purchased in
order to obtain the best execution and lower brokerage
commissions, if any. In such event, allocation of the
securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Sub-Adviser
in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to
such other customers;
Each Sub-Adviser shall select brokers or dealers that will
execute the purchases and sales of portfolio securities for
the Fund or portion thereof managed by such Sub-Adviser. In
making such selection, each Sub-Adviser shall use its best
efforts to obtain best execution, which includes most
favorable net results and execution of such Sub-Adviser's
orders, taking into account all appropriate factors, including
price, dealer spread or commission, size and difficulty of the
transaction and research or other services provided. It is
understood that no Sub-Adviser will be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Fund
or in respect of Fund assets, solely by reason of its having
caused the Fund to pay a member of a securities exchange, a
broker or a dealer a commission for effecting a securities
transaction of the Fund in excess of the amount of commission
another member of an exchange, broker or dealer would have
charged, if such Sub-Adviser determined in good faith that the
commission paid was reasonable in relation to the brokerage
and research services provided by such member, broker or
dealer, viewed in terms of that particular transaction or the
Sub-Adviser's overall responsibilities with respect to its
accounts, including the Fund, as to which it exercises
investment discretion.
Each Sub-Adviser is authorized to consider for investment by
the Fund or portion thereof managed by such Sub-Adviser
securities that may also be appropriate for other funds and/or
clients serviced by such Sub-Adviser. To assure fair treatment
of the Fund and all other clients of a Sub-Adviser in
situations in which two or more clients' accounts participate
simultaneously in a buy or sell program involving the same
security, such transactions shall be allocated among the Fund
and other clients in a manner deemed equitable by the
Sub-Adviser.
Notwithstanding the previous paragraph, to the extent directed
by management of the Corporation in writing, the Adviser shall
direct one or more of the Sub-Advisers to execute purchases
and sales of portfolio securities for the Fund through brokers
or dealers designated by management of the Corporation to
Adviser for the purpose of providing direct benefits to the
Fund, provided that such Sub-Adviser determines that such
brokers or dealers will provide reasonable execution in view
of such other benefits. The Corporation understands that the
brokerage commissions or transaction costs in such
transactions may be higher, and that the Fund may receive less
favorable prices, than those which any such Sub-Adviser could
obtain from another broker or dealer, in order to obtain such
benefits for the Fund.
(i) With respect to any assets of the Fund not being managed by a
Sub-Adviser, the Adviser shall determine from time to time
what securities and other investments will be purchased,
retained or sold by the Corporation with respect to the Fund
or portion thereof not served by a Sub-Adviser. The Adviser
shall provide services to the Fund in accordance with the
Fund's investment objectives, policies and restrictions as
stated in the Fund's then current registration statement and
resolutions of the Corporation's Board of Directors. This
shall be subject to paragraph (h) hereof in the same manner as
a Sub-Adviser.
(j) The investment management services of the Adviser to the Fund
under this Agreement are not to be deemed exclusive, and the
Adviser shall be free to render similar services to others.
3. The Corporation has delivered copies of each of the following documents to
the Adviser and will promptly notify and deliver to it all future
amendments and supplements, it any:
(a) Articles of Incorporation of the Corporation, filed with the State
of Maryland on July 16, 1990 (such Articles of Incorporation, as
presently in effect and as amended from time to time, are herein
called the "Articles of Incorporation");
(b) By-Laws of the Corporation (such By-Laws, as presently in effect
and as amended from time to time, are herein called the
"By-Laws");
(c) Certified resolutions of the Directors of the Corporation
authorizing the appointment of the Adviser and approving the form
of this Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act
of 1933, as amended, on Form N-1A (No. 33-#####) (the
"Registration Statement") as filed with the Securities and
Exchange Commission (the "Commission") on [DATE] relating to the
Corporation and the shares of common stock. Par value $.001 per
share (the "Shares"), of the Fund;
(e) Notification of Registration of the Corporation under the 1940
Act on Form N-8A as filed with the Commission on July 16, 1990;
and
(f) Prospectus of the Fund, dated [ 1999] (such prospectus, as
presently in effect and as amended or supplemented with respect to
the Fund from time to time, is herein called the "Prospectus").
4. The Adviser shall keep the Fund's books and records with respect to its
services hereunder. The Adviser agrees that all records which it maintains
for the Fund are the property of the Corporation and it will promptly
surrender any of such records to the Corporation upon the Corporation's
request. The Adviser further agrees to preserve for the periods prescribed
by Rule 31a-2 of the Commission under the 1940 Act any such records as are
required to be maintained by the Adviser with respect to the Fund by Rule
31a-1 of the Commission under the 1940 Act. The Corporation acknowledges
and agrees that Sub-Advisers will be responsible for maintenance of books
and records with respect to the securities transactions of the Fund managed
by them.
5. During the term of this Agreement the Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement
(including without limitation all compensation of Sub-Advisers to the Fund
pursuant to agreements with such Sub-Advisers) other than the cost of
securities and investments purchased for the Fund (including taxes and
brokerage commissions, if any).
6. For the services provided and the expenses borne pursuant to this
Agreement, the Adviser will receive from the Fund as full compensation
therefor a fee at an annual rate equal to 1.00% of the Fund's average daily
net assets. This fee will be computed based on net assets at 4:00 P.M. New
York time on each day the New York Stock Exchange is open for trading and
will be paid to the Adviser monthly during the succeeding calendar month.
7. The Adviser shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to
which this Agreement relates, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the
amount set forth in Section 36(b)(3) of the 1940 Act) or a loss resulting
from wilful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
8. This Agreement shall continue in effect for two years from the date of its
execution and thereafter, but only so long as its continuance is
specifically approved at least annually in conformity with the requirements
of the 1940 Act; provided, however, that this Agreement may be terminated
with respect to the Fund by the Corporation at any time, without the
payment of any penalty, by vote of a majority of all the Directors of the
Corporation or by "vote of a majority of the outstanding voting securities"
of the Fund on 60 days written notice to the Adviser, or by the Adviser at
any time, without the payment of any penalty, on 90 days written notice to
the Corporation. This Agreement will automatically and immediately
terminate in the event of its "assignment".
9. The Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided herein or
authorized by the Directors of the Corporation from time to time, have no
authority to act for or represent the Fund or the Corporation in any way or
otherwise be deemed an agent of the Fund or the Corporation.
10. This Agreement may be amended by mutual consent, but the consent of the
Corporation must be approved (a) by vote of a majority of those Directors
of the Corporation who are not parties to this Agreement or "interested
persons" of any such party, cast in person at a meeting called for the
purpose of voting on such amendment, and (b) by "vote of a majority of the
outstanding voting securities" of the Fund.
11. As used in this Agreement, the terms "assignment", "interested persons" and
"vote of a majority of the outstanding voting securities" shall have the
meanings assigned to them respectively in the 1940 Act.
12. Notices of any kind to be given to the Adviser by the Corporation shall be
in writing and shall be duly given if mailed or delivered to the Adviser at
59 Wall Street, New York, New York 10005, Attention: Treasurer, or at such
other address or to such other individual as shall be specified by the
Adviser to the Corporation. Notices of any kind to be given to the
Corporation by the Adviser shall be in writing and shall be duly given if
mailed or delivered to the Corporation at The 59 Wall Street Fund, Inc., 21
Milk Street, Boston, Massachusetts 02109, Attention: Secretary, or at such
other address or to such other individual as shall be specified by the
Corporation to the Adviser.
13. The Directors have authorized the execution of this Agreement in their
capacity as Directors and not individually and the Adviser agrees that
neither the shareholders nor the Directors nor any officer, employee,
representative or agent of the Corporation shall be personally liable upon,
nor shall resort be had to their private property for the satisfaction of,
obligations given, executed or delivered on behalf of or by the
Corporation, that the shareholders, Directors, officers, employees,
representatives and agents of the Corporation shall not be personally
liable hereunder, and the Adviser shall look solely to the property of the
Corporation for the satisfaction of any claim hereunder.
14. This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original.
15. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers or Partners designated below on the day and year
first above written.
THE 59 WALL STREET FUND, INC.
By
Joseph V. Shields, Jr., Chairman
Christine A. Drapeau
Assistant Secretary
BROWN BROTHERS HARRIMAN & CO.
By
John A. Nielsen, Partner
ATTEST:
Christine A. Drapeau
Assistant Secretary
THE 59 WALL STREET FUND, INC.
INVESTMENT SUB-ADVISORY AGREEMENT
THE 59 WALL STREET OPPORTUNITIES FUND
AGREEMENT, made on the [ ] day of [ ], 1999, between BROWN BROTHERS
HARRIMAN& CO., a New York limited partnership (the "Adviser") and [ ], a [ ]
corporation and a registered investment adviser (the "Sub-Adviser").
WHEREAS, the Adviser is the investment adviser for The 59 Wall Street
Opportunities Fund (the "Fund"), a series of The 59 Wall Street Fund, Inc., a
Maryland corporation (the "Corporation"), an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to render investment
advisory services to the Fund upon the terms and conditions set forth, and the
Sub-Adviser is willing to render such services;
NOW, THEREFORE, this Agreement
WITNESSETH:
that in consideration of the premises and mutual promises hereinafter set
forth, the parties hereto agree as follows:
1. The Adviser hereby appoints the Sub-Adviser to act as investment
sub-adviser to the Fund for the period and on the terms set forth in this
Agreement. The Sub-Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided. The Sub-Adviser
represents that it is registered as an investment adviser under the Investment
Advisers Act of 1940 (the "Advisers Act") or is a "bank" as defined in Section
202(a)(2) of the Advisers Act or an "insurance company" as defined in Section
202(a)(2) of the Advisers Act.
2. Subject to the general supervision of the Directors of the Corporation
and the Adviser, the Sub-Adviser shall manage the investment operations of those
assets of the Fund which the Adviser determines to assign to the Sub-Adviser
(those assets being referred to as the "Fund Account") and, with respect to the
Fund Account, the composition of the portfolio of securities and investments,
including cash, the purchase, retention and disposition thereof and agreements
relating thereto, in accordance with the Fund's investment objective and
policies as stated in the Prospectus (as defined in paragraph 3 of this
Agreement) and subject to the following understandings:
(a) The Sub-Adviser shall have overall responsibility for the general
management and investment of the assets and securities portfolios of the Fund
Account.
(b) The Sub-Adviser shall develop overall investment programs and
strategies for the Fund Account and shall revise such programs as necessary, and
shall monitor and report periodically implementation of the programs.
(c) The Sub-Adviser shall maintain books and records with respect to the
securities transactions of the Fund Account and shall render to the Adviser or
the Board of Directors of the Corporation such periodic reports concerning the
business and investments of the Fund Account as shall reasonably be requested.
(d) The Sub-Adviser, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Corporation's Articles of
Incorporation and By-Laws and the Prospectus of the Fund and with the
instructions and directions of the Directors of the Corporation and the Adviser
and will conform to and comply with the requirements of the 1940 Act and all
other applicable federal and state laws and regulations.
(e) The Sub-Adviser shall determine, with respect to the Fund Account, the
securities to be purchased, sold or lent by the Corporation and as agent for the
Fund will effect portfolio transactions pursuant to its determinations either
directly with the issuer or with any broker and/or dealer in such securities; in
placing orders with brokers and or dealers the Sub-Adviser intends to seek best
price and execution for purchases and sales; the Sub-Adviser shall also make
recommendations regarding whether or not the Corporation shall enter into
repurchase or reverse repurchase agreements and interest rate futures contracts.
(f) On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other customers, the
Sub-Adviser may, to the extent permitted by applicable laws and regulations, but
shall not be obligated to, aggregate the securities to be so sold or purchased
in order to obtain the best execution and lower brokerage commissions, if any.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Sub-Adviser in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other customers;
The Sub-Adviser shall select brokers or dealers that will execute the
purchases and sales of portfolio securities for the Fund Account. In making such
selection, the Sub-Adviser shall use its best efforts to obtain best execution,
which includes most favorable net results and execution of the Sub-Adviser's
orders, taking into account all appropriate factors, including price, dealer
spread or commission, size and difficulty of the transaction and research or
other services provided. It is understood that the Sub-Adviser will not be
deemed to have acted unlawfully, or to have breached a fiduciary duty to the
Fund or in respect of Fund Account, solely by reason of its having caused the
Fund to pay a member of a securities exchange, a broker or a dealer a commission
for effecting a securities transaction of the Fund in excess of the amount of
commission another member of an exchange, broker or dealer would have charged,
if the Sub-Adviser determined in good faith that the commission paid was
reasonable in relation to the brokerage and research services provided by such
member, broker or dealer, viewed in terms of that particular transaction or the
Sub-Adviser's overall responsibilities with respect to its accounts, including
the Fund, as to which it exercises investment discretion.
The Sub-Adviser is authorized to consider for investment by the Fund
Account securities that may also be appropriate for other funds and/or clients
serviced by the Sub-Adviser. To assure fair treatment of the Fund and all other
clients of a Sub-Adviser in situations in which two or more clients' accounts
participate simultaneously in a buy or sell program involving the same security,
such transactions shall be allocated among the Fund and other clients in a
manner deemed equitable by the Sub-Adviser.
Notwithstanding the previous paragraph, to the extent directed by the
Adviser or the management of the Corporation in writing, the Sub-Adviser shall
execute purchases and sales of portfolio securities for the Fund Account through
brokers or dealers designated by management of the Corporation or the Adviser
for the purpose of providing direct benefits to the Fund, provided that the
Sub-Adviser determines that such brokers or dealers will provide reasonable
execution in view of such other benefits. The Corporation understands that the
brokerage commissions or transaction costs in such transactions may be higher,
and that the Fund may receive less favorable prices, than those which the
Sub-Adviser could obtain from another broker or dealer, in order to obtain such
benefits for the Fund.
(g) The investment management services of the Sub-Adviser to the Fund under
this Agreement are not to be deemed exclusive, and the Sub-Adviser shall be free
to render similar services to others.
3. The Adviser has delivered copies of each of the following documents to
the Sub-Adviser and will promptly notify and deliver to it all future amendments
and supplements, it any:
(a) Articles of Incorporation of the Corporation, filed with the State of
Maryland on July 16, 1990 (such Articles of Incorporation, as presently in
effect and as amended from time to time, are herein called the "Articles of
Incorporation");
(b) By-Laws of the Corporation (such By-Laws, as presently in effect and as
amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Directors of the Corporation authorizing
the appointment of the Sub-Adviser and approving the form of this Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-1A (No. 33-#####) (the "Registration Statement") as
filed with the Securities and Exchange Commission (the "Commission") on [DATE]
relating to the Corporation and the shares of common stock. Par value $.001 per
share (the "Shares"), of the Fund;
(e) Notification of Registration of the Corporation under the 1940 Act on
Form N-8A as filed with the Commission on July 16, 1990; and
(f) Prospectus of the Fund, dated [ 1999] (such prospectus, as presently in
effect and as amended or supplemented with respect to the Fund from time to
time, is herein called the "Prospectus").
4. The Sub-Adviser shall keep the Fund Account's books and records with
respect to its services hereunder and as required pursuant to paragraph 2(c).
The Sub-Adviser agrees that all records which it maintains for the Fund Account
are the property of the Corporation and it will promptly surrender any of such
records to the Corporation upon the Corporation's request. The Sub-Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 of the
Commission under the 1940 Act any such records as are required to be maintained
by the Sub-Adviser with respect to the Fund by Rule 31a-1 of the Commission
under the 1940 Act.
5. During the term of this Agreement the Sub-Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement other than
the cost of securities and investments purchased for the Fund Account (including
taxes and brokerage commissions, if any).
6. The Corporation or the Adviser will vote all proxies solicited by or
with respect to the issuers of securities in which assets of the Fund Account
may be invested from time to time. At the request of the Corporation or the
Adviser, the Sub-Adviser shall provide the Corporation or the Adviser, as the
case may be, with its recommendations as to the voting of such proxies.
7. For the services provided and the expenses borne pursuant to this
Agreement, the Sub-Adviser will receive from the Adviser as full compensation
therefor a fee at an annual rate equal to 0.##% of the Fund Account's average
daily net assets. This fee will be computed based on net assets at 4:00 P.M. New
York time on each day the New York Stock Exchange is open for trading and will
be paid to the Sub-Adviser monthly during the succeeding calendar month.
Pursuant to the provisions of the Investment Advisory Agreement between the
Corporation and the Adviser, the Adviser is solely responsible for the payment
of fees to the Sub-Adviser, and the Sub Adviser agrees to seek payment of its
fees solely from the Adviser.
8. The Sub-Adviser shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Adviser or the Fund in connection with
the matters to which this Agreement relates, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services (in which case any award of damages shall be limited to the period and
the amount set forth in Section 36(b)(3) of the 1940 Act) or a loss resulting
from wilful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
9. This Agreement shall continue in effect for two years from the date of
its execution and thereafter, but only so long as its continuance is
specifically approved at least annually in conformity with the requirements of
the 1940 Act; provided, however, that this Agreement may be terminated by the
Adviser at any time without the payment of any penalty on sixty days' written
notice to the Sub-Adviser. This Agreement may also be terminated at any time,
without the payment of any penalty, by vote of a majority of all the Directors
of the Corporation or by "vote of a majority of the outstanding voting
securities" of the Fund on 60 days written notice to the Sub-Adviser, or by the
Sub-Adviser at any time, without the payment of any penalty, on 90 days written
notice to the Adviser. This Agreement will automatically and immediately
terminate in the event of its "assignment".
10. The Sub-Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided herein or
authorized by the Adviser or the Directors of the Corporation as the case may be
from time to time, have no authority to act for or represent the Adviser or Fund
or the Corporation, as applicable, in any way or otherwise be deemed an agent of
the Adviser or the Fund or the Corporation, as applicable.
11. This Agreement may be amended by mutual consent, provided, however,
that in no event may it be amended without the approval of the Board of
Directors of the Corporation in the manner required by the 1940 Act.
12. As used in this Agreement, the terms "assignment" and "vote of a
majority of the outstanding voting securities" shall have the meanings assigned
to them respectively in the 1940 Act.
13. Notices of any kind to be given to the Sub-Adviser by the Corporation
or the Adviser, as the case may be, shall be in writing and shall be duly given
if mailed or delivered to the Sub-Adviser at ___________________, or at such
other address or to such other individual as shall be specified by the
Sub-Adviser. Notices of any kind to be given to the Adviser by the Sub-Adviser
shall be in writing and shall be duly given if mailed or delivered to the
Adviser at 59 Wall Street, New York, New York, 10005, Attention: Treasurer, or
at such other address or to such other individual as shall be specified by the
Adviser to the Sub-Adviser.
14. Both parties are expressly put on notice of the Corporation's Articles
of Incorporation and the limitation of shareholder and Director liability
contained therein. The Sub-Adviser and the Adviser agree that neither the
shareholders nor the Directors nor any officer, employee, representative or
agent of the Corporation shall be personally liable upon, nor shall resort be
had to their private property for the satisfaction of, obligations given,
executed or delivered on behalf of or by the Corporation, that the shareholders,
Directors, officers, employees, representatives and agents of the Corporation
shall not be personally liable hereunder, and the Adviser and the Sub-Adviser
shall look solely to the property of the Corporation for the satisfaction of any
claim hereunder.
15. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original.
16. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers or Partners designated below on the day and year
first above written.
[NAME OF SUB-ADVISER]
By
Name
Title
ATTEST:
Name
Title
BROWN BROTHERS HARRIMAN &CO.
By
John A. Nielsen, Partner
ATTEST:
Christine A. Drapeau
Assistant Secretary
APPENDIX A
Fund Annual Fee
The 59 Wall Street Inflation-Indexed Securities Fund 0.25%
The 59 Wall Street U.S. Equity Fund 0.25%
The 59 Wall Street Small Company Fund 0.25%
The 59 Wall Street European Equity Fund 0.25%
The 59 Wall Street Pacific Basin Equity Fund 0.25%
The 59 Wall Street International Equity Fund1 0.25%
The 59 Wall Street Tax-Efficient U.S. Equity Fund2 0.25%
The 59 Wall Street Opportunities Fund3 0.25%
WS5151D
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1Added August 23, 1994.
2Added August 11, 1998.
3Added August 10, 1999.
Appendix A
Fund Annual Fee
The 59 Wall Street Inflation-Indexed Securities Fund 0.25%
The 59 Wall Street U.S. Equity Fund 0.25%
The 59 Wall Street Small Company Fund 0.25%
The 59 Wall Street European Equity Fund 0.25%
The 59 Wall Street Pacific Basin Equity Fund 0.25%
The 59 Wall Street International Equity Fund1 0.25%
The 59 Wall Street Tax-Efficient U.S. Equity Fund2 0.25%
The 59 Wall Street Opportunities Fund3 0.25%
WS5182C
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1Added August 23, 1994.
2Added August 11, 1998.
3Added August 10, 1999.
