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PROSPECTUS
The 59 Wall Street
High Yield Fixed Income Fund
21 Milk Street, Boston, Massachusetts 02109
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The High Yield Fixed Income Fund is a separate series of The 59 Wall
Street Fund, Inc. (the Corporation). Shares of the Fund are offered by this
Prospectus.
The High Yield Fixed Income Fund invests all of its assets in the BBH High
Yield Fixed Income Portfolio (the Portfolio).
Brown Brothers Harriman is the Investment Adviser for the Portfolio and
the Administrator and Shareholder Servicing Agent of the Fund. Shares of the
Fund are offered at net asset value without a sales charge.
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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 November 15, 2000.
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TABLE OF CONTENTS
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Investment Objective .................................................. 3
Principal Investment Strategies ....................................... 3
Principal Risk Factors ................................................ 4
Performance Information ............................................... 5
Fees and Expenses of the Fund ......................................... 6
Investment Adviser .................................................... 7
Shareholder Information ............................................... 7
Additional Information ................................................ 10
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INVESTMENT OBJECTIVE
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The investment objective of the Portfolio is to provide maximum total
return, consistent with preservation of capital and prudent investment
management.
PRINCIPAL INVESTMENT STRATEGIES
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The Fund invests all of its assets in the BBH High Yield Fixed Income
Portfolio, an investment company having the same investment objective as the
Fund. Under normal circumstances the Investment Adviser invests at least 65% of
the assets of the Portfolio in a diversified portfolio of high yield securities,
sometimes referred to as "junk bonds", rated below investment grade or if
unrated, determined by the Adviser to be of comparable quality. A debt security
is below investment grade if it is rated BB or lower by Standard & Poor's
Ratings Group or the equivalent rating by a nationally recognized securities
rating organization or, if unrated, determined to be of equivalent credit
quality by the Investment Adviser. The average maturity of the Portfolio
normally varies within a two- to ten-year time frame.
While the Portfolio focuses its investments on bonds issued by
corporations and other similar entities, it may invest in all types of debt
securities including, restricted securities and 144A securities. A Rule 144A
security is an unregistered security that can be sold to "qualified
institutional buyers" in accordance with the requirements of Rule 144A of the
Securities Act of 1933. The Portfolio's assets may also be invested in
securities with equity characteristics including, convertible preferred stocks
and bonds, preferred stocks and warrants. Convertible securities are typically
debt obligations or preferred stock that may be converted within a specific
period of time into a certain amount of common stock of the same or a different
issuer.
The total return sought by the Fund consists of income earned on the
Portfolio's investments, plus capital appreciation, if any, which generally
arises from decreases in interest rates or improving credit fundamentals for a
particular sector or security.
The Investment Adviser buys and sells securities denominated in currencies
other than the U.S. dollar, and interest and sale proceeds are received in
currencies other than the U.S. dollar. The Investment Adviser enters into
foreign currency exchange transactions from time to time to convert to and from
different foreign currencies and to convert foreign currencies to and from the
U.S. dollar. Forward foreign exchange contracts may be entered into on behalf of
the Portfolio.
In response to adverse market, economic, political and other conditions,
the Investment Adviser may make temporary investments for the Portfolio that are
not consistent with its investment objective and principal investment
strategies. Such investments may prevent the Portfolio from achieving its
investment objective. In doing so, the Investment Adviser may also invest the
assets of the Portfolio in U.S. Government securities or securities of its
agencies or instrumentalities, if at any time the Investment Adviser believes
there is an inadequate supply of appropriate high yield securities in which to
invest or if the Investment Adviser believes these issues will provide superior
returns or liquidity. The Investment Adviser buys from among the available
issues those securities that, in the Investment Adviser's opinion, will provide
the maximum relative value to the Portfolio.
Rather than investing directly in the securities in which the Portfolio
primarily invests, the Portfolio may use other investment techniques to gain
exposure to market movements related to such securities, such as entering into a
series of contracts to buy or sell such securities and/or as part of a strategy
designed to reduce exposure to other risks, such as interest rate or currency
risk. The Portfolio may, but is not required to, use derivative instruments for
risk management purposes or as
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part of its investment strategies. The Investment Adviser may decide not to
employ any of these strategies and there is no assurance that any derivatives
strategy used by the Portfolio will succeed.
PRINCIPAL RISK FACTORS
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The principal risks of investing in the Fund and the circumstances
reasonably likely to adversely affect an investment are described below. 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.
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 High Yield Risk:
A fund that invests in high yield securities and unrated securities of
similar credit quality (commonly known as "junk bonds") may be subject to
greater levels of market, interest rate, credit, issuer and liquidity risk than
a fund that does not invest in such securities. High yield securities are
considered predominately speculative with respect to the issuer's continuing
ability to make principal and interest payments. An economic downturn or period
of rising interest rates could adversely affect the market for high yield
securities and reduce the Portfolio's ability to sell its high yield securities
(See "Liquidity Risk").
o Interest Rate Risk:
Interest rate risk refers to the price fluctuation of a bond in response
to changes in interest rates. In general, bonds with shorter maturities are less
sensitive to interest rate movements than those with longer maturities.
o Credit Risk:
Credit risk refers to the likelihood that an issuer will default on
interest or principal payments. Investments in junk bonds and other high yield
fixed income securities may involve a higher degree of credit risk and may be
considered speculative.
o Issuer Risk:
The value of a security may decline for a number of reasons which directly
relate to the issuer, such as management performance, financial leverage and
reduced demand for the issuer's goods or services.
o Liquidity Risk:
Liquidity risk exists when a particular instrument is difficult to
purchase or sell. If a transaction is particularly large or if the relevant
market is illiquid (as is the case with many restricted securities), it may not
be possible to initiate a transaction or liquidate a position at an advantageous
time or price. Securities in the Portfolio are generally less liquid than many
other investments including but not limited to securities issued by the U.S.
government, commercial paper and those of higher rated investment grade
corporate securities.
o Maturity Risk:
Interest rate risk will generally affect the price of a fixed income
security more if the security has a longer maturity. Fixed income securities
with longer maturities will therefore be more volatile than other fixed income
securities with shorter maturities. Conversely, fixed income securities with
shorter maturities will be less volatile but generally provide lower returns
than fixed income securities with longer maturities. The average maturity of a
fund's investments will affect the volatility of a fund's share price.
o Mortgage Risk:
Rising interest rates tend to extend the duration of mortgage-related
securities, making them more sensitive to changes in interest rates. As a
result, in a period of rising interest rates, a fund that holds mortgage-related
securities may exhibit additional volatility. This is known as extension risk.
In addition, mortgage-related securities are subject to
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prepayment risk. When interest rates decline, borrowers may pay off their
mortgages sooner than expected. This can reduce the returns of the Fund because
the Portfolio will have to reinvest that money at the lower prevailing interest
rates.
o Derivatives Risk:
Derivatives are financial contracts whose value depends on, or is derived
from, the value of an underlying asset, reference rate or index. The Portfolio's
use of derivative instruments involves risks different from, or possibly greater
than, the risks associated with investing directly in securities and other
traditional investments. Derivatives are subject to a number of risks described
elsewhere in this section, such as liquidity risk, interest rate risk, market
risk and credit risk. They also involve the risk of mispricing or improper
valuation and the risk that changes in the value of the derivative may not
correlate perfectly with the underlying asset, rate or index. By investing in a
derivative instrument, the Portfolio could lose more than the principal amount
invested. Also, suitable derivative transactions may not be available in all
circumstances and there can be no assurance that the Portfolio will engage in
these transactions to reduce exposure to other risks when that would be
beneficial.
o Foreign Investment Risk:
Investing in securities of foreign issuers involves risks not typically
associated with investing in securities of domestic issuers including foreign
exchange risk, regulatory risk and tax risk. Changes in political or social
conditions, diplomatic relations, or limitations on the removal of funds or
assets may adversely affect the value of the investments in the Portfolio.
Changes in government administrations or economic or monetary policies in the
United States or abroad could result in appreciation or depreciation of
portfolio securities and could favorably or unfavorably affect the Portfolio's
operations. The economies of individual foreign nations differ from the U.S.
economy, whether favorably or unfavorably, in areas such as growth of domestic
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. Interest paid by foreign issuers may be subject to
withholding and other foreign taxes, which may decrease the net return on
foreign investments as compared to interest paid to the Portfolio by domestic
issuers.
Because foreign securities generally are denominated and pay interest in
foreign currencies, and the Portfolio holds various foreign currencies from time
to time, the value of the assets of the Portfolio as measured in U.S. dollars is
affected favorably or unfavorably by changes in exchange rates. The Portfolio
also incurs costs in connection with conversion between various currencies.
o Leveraging Risk:
The use of derivatives may create leveraging risk. The use of leverage may
cause the Portfolio to liquidate portfolio positions when it may not be
advantageous to do so to satisfy its obligations or to meet segregation
requirements. Leverage, including borrowing, may cause the Portfolio to be more
volatile than if the Portfolio had not been leveraged. This is because leverage
tends to exaggerate the effect of any increase or decrease in the value of the
Portfolio's securities.
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 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.
PERFORMANCE INFORMATION
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Historical total return information for any period or portion thereof
prior to the establishment of the Fund will be that of the BBH High Yield Fixed
Income Portfolio adjusted to assume that all charges, expenses and fees which
are presently in effect for the Fund were deducted during such periods, as
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permitted by applicable SEC staff interpretations. Since the Fund has not been
in existence for a full calendar year, bar chart and table information are not
included.
FEES AND EXPENSES OF THE FUND
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The tables below describe the 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/1/
(Expenses that are deducted from Fund assets as a percentage of average
net assets)
Other Expenses
Administration Fee ...................................... 0.11%
Expense Payment Agreement ............................... 0.64
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Total Annual Fund Operating Expenses/2/ ................. 0.75%
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/1/ The expenses shown for the Fund include the expenses of the Portfolio.
/2/ The expense payment arrangement is a contractual arrangement which limits
the total annual fund operating expenses to 0.75%. The expense payment
agreement terminates on November 1, 2005. Included within the expense
payment agreement is a management fee of 0.35% and a shareholder
servicing/eligible institution fee of 0.25%.
EXAMPLE/3/
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 on an investor's investment may be higher or lower, based on these
assumptions the investor's costs would be:
1 year .................................................. $ 77
3 years ................................................. $240
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/3/ The example above reflects the expenses of the Fund and the Portfolio.
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INVESTMENT ADVISER
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The Investment Adviser to the Portfolio is Brown Brothers Harriman,
Private Bankers, a New York limited partnership established in 1818. The firm is
subject to examination and regulation by the Superintendent of Banks of the
State of New York and by the Department of Banking of the Commonwealth of
Pennsylvania. The firm is also subject to supervision and examination by the
Commissioner of Banks of the Commonwealth of Massachusetts. The Investment
Adviser is located at 59 Wall Street, New York, NY 10005.
The Investment Adviser provides investment advice and portfolio management
services to the Portfolio. Subject to the general supervision of the Trustees of
the Portfolio, the Investment Adviser makes the day-to-day investment decisions
for the Portfolio, places the purchase and sale orders for the portfolio
transactions of the Portfolio, and generally manages the Portfolio's
investments. The Investment Adviser provides a broad range of investment
management services for customers in the United States and abroad. At June 30,
2000, it managed total assets of approximately $35 billion.
A team of individuals manages the Portfolio's securities on a day-to-day
basis. This team includes Mr. Glenn E. Baker and Mr. Ronald J. Habakus. Mr.
Baker holds a B.A. and a M.B.A. from the University of Michigan and is a
Chartered Financial Analyst. He joined Brown Brothers Harriman in 1991. Mr.
Habakus holds a B.S. and a M.S. from Lehigh University and a M.B.A. from Duke
University and is a Chartered Financial Analyst. He joined Brown Brothers
Harriman in 1999. Prior to joining Brown Brothers Harriman, he worked for
Sanford Bernstein from 1998 to 1999. Prior to 1998, he worked for Merrill Lynch
& Co.
The Portfolio pays the Investment Adviser an annual fee, computed daily
and payable monthly, equal to 0.35% of the average daily net assets of the
Portfolio. This fee compensates the Investment Adviser for its services and its
expenses (such as salaries of its personnel).
SHAREHOLDER INFORMATION
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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 determination of the Fund's net asset value is made by
subtracting from the value of the total net assets of the Fund the amount of its
liabilities and dividing the difference by the number of shares of the Fund
outstanding at the time the determination is made.
The Portfolio 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 Portfolio's Trustees.
PURCHASE OF SHARES
The Corporation offers shares of the Fund on a continuous basis at their
net asset value without a sales charge. The Corporation reserves the right to
determine the purchase orders for Fund shares that it will accept. Investors may
purchase shares on any day the net asset value is calculated if the Corporation
receives the purchase order, including 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. 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.
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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
which currently is as low as $1,000. 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, 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 Corporation's Custodian, Brown Brothers Harriman, 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
The Corporation executes your redemption request at the next net asset
value calculated after the Corporation receives your redemption request. 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 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
$100,000, 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.
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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.
Redemptions may be suspended or payment dates postponed when the NYSE is closed
(other than weekends or holidays), when trading on the NYSE is restricted, or as
permitted by the SEC.
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 at least annually as
a dividend, and substantially all of the Fund's realized net long-term capital
gains, if any, 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. The Fund's net income and realized net capital
gains include that Fund's pro rata share of the Portfolio's net income and
realized net capital gains.
Unless a shareholder whose shares are held directly in the shareholder's
name on the books of the Corporation elects to have dividends and capital gains
distributions paid in cash, the Corporation automatically reinvests dividends
and capital gains distributions in additional Fund shares without reference to
the minimum subsequent purchase requirement. There are no sales charges for the
reinvestment of dividends.
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 Portfolio holds its assets. Capital gains distributions are taxable to
shareholders as long-term capital gains, whether paid in cash or reinvested in
additional shares and regardless of the length of time a particular shareholder
has held Fund shares.
The treatment of the Fund and its shareholders in those states which have
income tax laws might differ from treatment under the federal income tax laws.
Therefore, distributions to shareholders may be subject to additional state and
local taxes. Shareholders are urged to consult their tax advisors regarding any
state or local taxes.
Foreign Investors
The Fund is designed for investors who are either citizens of the United
States or aliens subject to United States income tax. Prospective investors who
are not citizens of the United States and who are not aliens subject to United
States income tax are subject to United States withholding tax on the entire
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.
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ADDITIONAL INFORMATION
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In pursuing its investment objective, the Portfolio may engage in a number
of principal and non-principal techniques and practices. Investment techniques
and practices which are the principal focus of the Portfolio are described
together with their risks, in the Prospectus. Both principal and non-principal
investment techniques and practices are described, together with their risks, in
the Statement of Additional Information:
Investment Techniques/Securities
Asset-Backed Securities
Certificates of Deposit
Collateralized Bond Obligations
Collateralized Mortgage Obligations
Commercial Paper
Convertible Bonds
Collateralized Loan Obligations
Corporate Securities
Domestic and Foreign Government Securities
Domestic and Foreign Agency Securities
Event-linked securities
Loan Participations and Assignments
Loans and Other Direct Indebtedness
Mortgage Backed Securities
Municipal Bonds
Pass-Through Securities
Stripped Mortgage-Backed Securities
Variable and Floating Rate Obligations
Zero Coupon and Deferred Interest Bonds
Common Stocks
Convertible Preferred Stocks
Preferred Stocks
Warrants
Payment-in-Kind Bonds
Brady Bonds
Depository Receipts
Dollar-Denominated Foreign Debt Securities
Eurobonds
Emerging Markets
Foreign Securities
Forward Contracts
Futures Contracts
Indexed Securities/Structured Products
Insurance Contracts
Investment in Other Investment Companies
Lending of Portfolio Securities
Leveraging Transactions
Options on Foreign Currencies, Futures Contracts, Securities and Stock Indices
Reset Options
"Yield Curve" Options
Repurchase Agreements
Reverse Repurchase Agreements
Restricted Securities
Short Sales Against the Box
Short Term Instruments
Swaps and Related Derivative Instruments
Borrowings collateralized by portfolio investments
"When-Issued" Securities
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Investment Structure. Other mutual funds or institutional investors may
invest in the Portfolio on the same terms and conditions as the Fund. However,
these other investors may have different aggregate performance results. The
Corporation may withdraw the Fund's investment in the Portfolio at any time as a
result of changes in the Portfolio's investment objective, policies or
restrictions or if the Board of Directors determines that it is otherwise in the
best interests of the Fund to do so.
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The 59 Wall Street
High Yield Fixed
Income Fund
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 affected the Fund's performance
during its last fiscal year.
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 or make shareholder inquiries:
o By telephone
Call 1-800-625-5759
o By mail write to the Fund's Shareholder Servicing Agent:
Brown Brothers Harriman
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
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 20549-0102. Information on the
operations of the Public Reference Room may be obtained by calling
1-202-942-8090. Additionally, this information is available on the EDGAR
database at the SEC's internet site at http://www.sec.gov. A copy may be
obtained, after paying a duplicating fee, by electronic request at the following
e-mail address: [email protected].
SEC file number: 811-06139
High Yield Fixed Income Fund
Prospectus
November 15, 2000
