59 WALL STREET FUND INC, 485APOS, 2000-06-05

59 WALL STREET FUND INC
485APOS, 2000-06-05

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As filed with the Securities and Exchange Commission on June 5, 2000
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. 28

REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 53

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 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 High Yield Fixed Income Fund
21 Milk Street, Boston, Massachusetts 02109

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 & Co. 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.

-------------------------------------------------------------------------------
Neither The Securities And Exchange Commission Nor Any State Securities
Commission Has Approved Or Disapproved Of These Securities Or Passed Upon
The Adequacy Or Accuracy Of This Prospectus. Any Representation To The
Contrary Is A Criminal Offense.
------------------------------------------------------------------------------

The date of this Prospectus is [ ], 2000.

<PAGE>

TABLE OF CONTENTS

Page
------
Investment Objective 3
Investment Strategies 3
Principal Risk Factors 3
Fees and Expenses of the Fund 7
Investment Adviser 8
Shareholder Information 8
Additional Investment Information 12

<PAGE>

INVESTMENT OBJECTIVE

The investment objective of the Portfolio is to provide maximum total return,
consistent with preservation of capital and prudent investment management, by
investing primarily in a professionally managed, diversified portfolio of fixed
income securities, some of which may involve equity features.

INVESTMENT STRATEGIES

The Fund invests all of its assets in the BBH High Yield Fixed Income Portfolio,
an investment company having the same 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 ("junk bonds")
rated below investment grade or if unrated, determined by the Adviser to be of
comparable quality. The remainder of the Portfolio's assets may be invested in a
range of investment grade fixed income and equity instruments (See "Additional
Investment Information"). The average portfolio duration of the Portfolio
normally varies within a two- to six-year time frame.

The Investment Adviser may invest the Portfolio's assets in derivative
instruments, such as futures contracts, swap agreements, and options contracts
(including cap and floor options on securities, indexes and futures contracts),
or in mortgage-backed, asset-backed or other structured securities. Rather than
investing directly in the securities in which the Portfolio primarily invests,
the Portfolio may use other instrument 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 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.

PRINCIPAL RISK FACTORS

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 interest rate, credit 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 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 Credit Risk:

Credit risk refers to the likelihood that an issuer will default on
interest or principal payments.

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 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 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 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 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 Leveraging Risk:

The use of derivatives may create leveraging risk. To mitigate leveraging
risk, the Investment Adviser will segregate liquid assets or otherwise
cover the transactions that may give rise to such 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.

o Concentration Risk:

Concentration of investments in a small number of industries or foreign
countries increases risk. Because the Portfolio may invest a significant
portion of its assets in one industry or foreign country, the value of
these investments and the net assets of the Portfolio could decline more
dramatically as a result of adverse events affecting that one industry or
foreign country.

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 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.

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.

<PAGE>
FEES AND EXPENSES OF THE FUND

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 EXPENSES1
(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

Total Annual Fund Operating Expenses2 0.75%

__________________________________________
1The 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 0.30% and a shareholder servicing/eligible institution fee
of 0.25%.

EXAMPLE3

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

3The example above reflects the expenses of the Fund and the Portfolio.

<PAGE>

INVESTMENT ADVISER

The Investment Adviser to the Portfolio is Brown Brothers Harriman & Co.,
Private Bankers, a New York limited partnership established in 1818. The firm is
subject to examination and regulation by the Superintendent of Banks of the
State of New York and by the Department of Banking of the Commonwealth of
Pennsylvania. The firm is also subject to supervision and examination by the
Commissioner of Banks of the Commonwealth of Massachusetts. 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 December
31, 1999, 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. John P. Nelson 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
& Co. in 1991. Mr. Nelson holds a B.S. from St. Vincent's College. He joined
Brown Brothers Harriman & Co. in 1987. 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 & Co. in 1999. Prior to joining Brown
Brothers Harriman & Co., he worked for Sanford Bernstein from 1998 to 1999.
Prior to 1998, he worked for Merrill Lynch.

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

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.

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 Corporation's transfer agent, Forum
Shareholders Services, LLC, 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.

<PAGE>

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.

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 any realized net short-term capital gains 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.

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.

<PAGE>

ADDITIONAL INVESTMENT INFORMATION

In pursuing its investment objective, the Portfolio may invest in a number
of techniques and securities practices, which are described, together with their
risks, in the Statement of Additional Information. These techniques and
securities include, but are not limited to the following:

Investment Techniques/Securities

Debt Securities

Asset-Backed Securities

Certificates of Deposit

Collaterialized Bond Obligations

Collaterialized Mortgage Obligations

Commercial Paper

Convertible Bonds

Corporate Asset-Backed Securities, Collaterialized Loan

Obligations and Collaterialized Bond 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

Lower Rated Bonds

Mortgage-Backed Securities

Municipal Bonds

Pass-Through Securities

Stripped Mortgage-Backed Securities

Variable and Floating-Rate Obligations

Zero Coupon Bonds, Deferred Interest Bonds and PIK Bonds

Equity Securities

Common Stocks

Convertible Preferred Stocks

Preferred Stocks

Warrants
<PAGE>

Investment Techniques/Securities, continued

Foreign Securities Exposure

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

Options on Foreign Currencies

Options on Futures Contracts

Options on Securities

Options on 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 collaterialized by portfolio investments

Temporary Defensive Positions

"When-Issued" Securities

144A Securities

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.

Derivative Instruments. The Portfolio may, but is not required to, use
derivative instruments for risk management purposes or as 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. A description of these and other derivative instruments
that the Portfolio may use are described under "Investment Objectives and
Policies" in the Statement of Additional Information.

<PAGE>

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 & 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 20549-0102. 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

<PAGE>

High Yield Fixed Income Fund

Prospectus
[ ], 2000

<PAGE>

PROSPECTUS
The 59 Wall Street Broad Market Fixed Income Fund

21 Milk Street, Boston, Massachusetts 02109

The Broad Market 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 Broad Market Fixed Income Fund invests all of its assets in the BBH
Broad Market Fixed Income Portfolio (the Portfolio).

The date of this Prospectus is [ ], 2000.

<PAGE>

TABLE OF CONTENTS

Page
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Investment Objective 3
Investment Strategies 3
Principal Risk Factors 3
Fees and Expenses of the Fund 7
Investment Adviser 8
Shareholder Information 8
Additional Investment Information 12

<PAGE>

INVESTMENT OBJECTIVE

INVESTMENT STRATEGIES

The Fund invests all of its assets in the BBH Broad Market Fixed Income
Portfolio, an investment company having the same objective as the Fund. Under
normal circumstances the Investment Adviser invests at least 65% of the assets
of the Portfolio in a broad range of investment grade fixed income securities.
The Investment Adviser may invest the assets of the Portfolio in securities
issued by the U.S. Government, its agencies and instrumentalities, sovereign
foreign governments and their agencies and instrumentalities and, U.S. and
foreign companies and banks (See "Additional Investment Information"). The
average duration of the Portfolio normally varies within a two- to seven-year
time frame and the Portfolio invests only in investment grade securities.

An investment grade security is one rated investment grade at the time of
purchase, by either a nationally recognized statistical rating organization such
as Moody's Investors Service, Inc., Standard & Poor's Corporation, Fitch IBCA or
Duff & Phelps Credit Rating Co. (or, if unrated, a security that would, in the
opinion of the Investment Adviser, be investment grade if rated by a nationally
recognized statistical rating organization). In the event that a security is
downgraded below investment grade, the Investment Adviser will use his or her
expertise and judgement to evaluate when and if to sell the below investment
grade security.

The Investment Adviser may invest the Portfolio's assets in derivative
instruments, such as futures contracts, swap agreements, and options contracts
(including cap and floor options on securities, indexes and futures contracts),
or in mortgage-backed, asset-backed or other structured securities. 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.

PRINCIPAL RISK FACTORS

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 Interest Rate Risk:

o Credit Risk:

Credit risk refers to the likelihood that an issuer will default on
interest or principal payments.

o Issuer Risk:

o Liquidity Risk:

o Maturity Risk:

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, the Portfolio that holds
mortgage-related securities may exhibit additional volatility. This is
known as extension risk. In addition, mortgage-related securities are
subject to 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:

o Foreign Investment Risk:

o Leveraging Risk:

The use of derivatives may create leveraging risk. The use of leveraging
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.

o Concentration Risk:

Concentration of investments in a small number of industries or foreign
countries increases risk. Because the Portfolio may invest a significant
portion of its assets in one industry or foreign country, the value of these
investments and the net assets of the Portfolio could decline more
dramatically as a result of adverse events affecting that one industry or
foreign country.

<PAGE>

FEES AND EXPENSES OF THE FUND

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 EXPENSES1
(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

Total Annual Fund Operating Expenses2 0.75%

1The 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%. Included within the expense
payment agreement is a management fee of 0.35% and a shareholder
servicing/eligible institution fee of 0.25%.

EXAMPLE3

1 year $ 77
3 years $ 240

3The example above reflects the expenses of the Fund and the Portfolio.

<PAGE>

INVESTMENT ADVISER

A team of individuals manages the Portfolio's securities on a day-to-day
basis. This team includes Mr. Glenn E. Baker, Mr. John P. Nelson and Mr. James
J. Evans. 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 & Co. in
1991. Mr. Nelson holds a B.S. from St. Vincent's College. He joined Brown
Brothers Harriman & Co. in 1987. Mr. Evans holds a B.S. from the University of
Delaware and a M.B.A. from New York University and is a Chartered Financial
Analyst. He joined Brown Brothers Harriman & Co. in 1996. Prior to joining Brown
Brothers Harriman & Co., he worked at Fleet Investment Advisers.

The Portfolio pays the Investment Adviser an annual fee, computed daily and
payable monthly, equal to 0.30% 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

NET ASSET VALUE

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.

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 Corporation's transfer agent, Forum
Shareholder Services, LLC, 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.

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

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.

DIVIDENDS AND DISTRIBUTIONS

The Corporation declares and pays to shareholders substantially all of the
Fund's net income and any realized net short-term capital gains monthly 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.

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

Foreign Investors

<PAGE>

ADDITIONAL INVESTMENT INFORMATION

In pursuing its investment objective, the Portfolio may invest in a number of
techniques and securities practices, which are described, together with their
risks, in the Statement of Additional Information. These techniques and
securities include, but are not limited to the following:

Investment Techniques/Securities

Debt Securities

Asset-Backed Securities

Collaterialized Bond Obligations

Collaterialized Loan Obligations

Collaterialized Mortgage Obligations

Convertible Bonds

Corporate Securities

Corporate Asset-Backed Securities

Domestic and Foreign Government Securities

Domestic and Foreign Government Agency Securities

Event-Linked Securities

Mortgage-Backed Securities

Municipal Obligations

Pass-Through Securities

Stripped Mortgage-Backed Securities

Supranational Securities

Variable and Floating-Rate Obligations

Zero Coupon Bonds, Deferred Interest Bonds and PIK Bonds

Equity Securities

Preferred Stocks

Convertible Preferred Stocks

Forward Contracts

Futures Contracts

Indexed Securities/Structured Products

Options

Options on Foreign Currencies
<PAGE>

Investment Techniques/Securities, continued

Options on Futures Contracts

Options on Securities

Options on Swaps

Reset Options

Yield Curve Options

Repurchase Agreements

Reverse Repurchase Agreements

Restricted Securities

Short Term Instruments

Swaps and Related Derivative Instruments

TBA Mortgage-Backed Securities

Borrowings collaterialized by portfolio investments

"When-Issued" Securities

144A Securities

<PAGE>

The 59 Wall Street
Broad Market Fixed Income Fund

More information on the Fund is available free upon request, including the
following:

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 & 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

SEC file number: 811-06139

<PAGE>

Broad Market Fixed Income Fund

Prospectus
[ ], 2000

<PAGE>

-------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
THE 59 WALL STREET HIGH YIELD FIXED INCOME FUND
21 Milk Street, Boston, Massachusetts 02109
-------------------------------------------------------------------
The 59 Wall Street High Yield Fixed Income Fund (the "High Yield Fixed
Income Fund" or the "Fund") is a separate series 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 High Yield
Fixed Income Fund's investment objective is to provide investors with the
maximum total return, consistent with preservation of capital and prudent
investment management. There can be no assurance that the investment objective
of the Fund will be achieved.

The Corporation seeks to achieve the investment objective of the Fund
by investing all of the Fund's assets in the BBH High Yield Fixed Income
Portfolio (the "Portfolio"), a open-end investment management company having the
same investment objective as the Fund.

Brown Brothers Harriman & Co. is the investment adviser (the
"Investment Adviser") of the Portfolio. This Statement of Additional Information
is not a prospectus and should be read in conjunction with the Prospectus dated
[ ], 2000, a copy of which may be obtained from the Corporation at the address
noted above.
<TABLE>
<CAPTION>

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

Cross-Reference to
Page Page in Prospectus

Investments
Investment Objective and Policies . . . . . . . . . 3 3
Investment Restrictions . . . . . . . . . . . . . . 38
Management
Directors and Officers . . . . . . . . . . . . . . . 42
Investment Adviser . . . . . . . . . . . . . . . . . 47 8
Administrator . . . . . . . . . . . . . . . . . . . 48
Distributor . . . . . . . . . . . . . . . . . . . . 50
Shareholder Servicing Agent,
Financial Intermediaries and Eligible Institutions . . . . 51
Expense Payment Agreement 52
Custodian, Transfer and Dividend Disbursing Agent 53
Independent Auditors 53
Code of Ethics 53
Net Asset Value; Redemption in Kind . . . . . . . . 54 8
Computation of Performance . . . . . . . . . . . . . 55
</TABLE>

The date of this Statement of Additional
Information is [ ],2000.

<PAGE>

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

Cross-Reference to
Page Page in Prospectus

Purchases and Redemptions 57 9
Federal Taxes . . . . . . . . . . . . . . . . . . . 57 11
Description of Shares . . . . . . . . . . . . . . . 61
Portfolio Brokerage Transactions . . . . . . . . . . . . . . . 63
Additional Information . . . . . . . . . . . . . . . 64 12
Appendix - Description of Ratings. . . . . . . . . . . . . . . . 66
</TABLE>

The date of this Statement of Additional
Information is [ ], 2000.

<PAGE>

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

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

Debt Securities

Corporate Debt Securities

The Portfolio's investment in U.S. dollar or foreign currency-denominated
corporate debt securities of domestic or foreign issuers is limited to corporate
bonds, debentures, notes and other similar corporate debt instruments, including
convertible securities and corporate income-producing securities which meet the
minimum ratings criteria set forth for the Portfolio, or, if unrated, are in the
Adviser's opinion comparable in quality to corporate debt securities in which
the Portfolio may invest.

Corporate income-producing securities may include forms of preferred or
preference stock. The rate of interest on a corporate debt security may be
fixed, floating or variable, and may vary inversely with respect to a reference
rate. The rate of return or return of principal on some debt obligations may be
linked or indexed to the level of exchange rates between the U.S. dollar and a
foreign currency or currencies. Debt securities may be acquired with warrants
attached.

Debt Securities Rating Criteria

Investment grade debt securities are those rated "BBB" or higher by Standard &
Poor's Ratings Group ("Standard & Poor's") or the equivalent rating of other
nationally recognized securities rating organizations. Debt securities rated BBB
are considered medium grade obligations with speculative characteristics, and
adverse economic conditions or changing circumstances may weaken the issuer's
ability to pay interest and repay principal. If the rating of an investment
grade debt security changes to above medium investment grade, the Adviser will
consider if any action is appropriate in light of the Portfolio's investment
objective and policies.

3
<PAGE>

Below investment grade debt securities or comparable unrated securities are
commonly referred to as "junk bonds" and are considered predominantly
speculative and may be questionable as to principal and interest payments.
Changes in economic conditions are more likely to lead to a weakened capacity to
make principal payments and interest payments. The amount of high yield
securities outstanding has proliferated as an increasing number of issuers have
used high yield securities for corporate financing. An economic downturn could
severely affect the ability of highly leveraged issuers to service their debt
obligations or to repay their obligations upon maturity. Factors having an
adverse impact on the market value of lower quality securities will have an
adverse effect on the Fund's net asset value to the extent that the Portfolio
invests in such securities. In addition, the Portfolio may incur additional
expenses to the extent it is required to seek recovery upon a default in payment
of principal or interest on its portfolio holdings.

The secondary market for high yield securities may not be as liquid as the
secondary market for more highly rated securities, a factor which may have an
adverse effect on the Portfolio's ability to dispose of a particular security
when necessary to meet its liquidity needs. Under adverse market or economic
conditions, the secondary market for high yield securities could contract
further, independent of any specific adverse changes in the condition of a
particular issuer. As a result, the Portfolio could find it more difficult to
sell these securities or may be able to sell the securities only at prices lower
than if such securities were widely traded. Prices realized upon the sale of
such lower rated or unrated securities, under these circumstances, may be less
than the prices used in calculating the Fund's net asset value.

Since investors generally perceive that there are greater risks associated with
lower quality debt securities of the type in which the Portfolio may invest a
portion of its assets, the yields and prices of such securities may tend to
fluctuate more than those for higher rated securities. In the lower quality
segments of the debt securities market, changes in perceptions of issuers'
creditworthiness tend to occur more frequently and in a more pronounced manner
than do changes in higher quality segments of the debt securities market,
resulting in greater yield and price volatility.

Lower rated and comparable unrated debt securities tend to offer higher yields
than higher rated securities with the same maturities because the historical
financial condition of the issuers of such securities may not have been as
strong as that of other issuers. However, lower rated securities generally
involve greater risks of loss of income and principal than higher rated
securities. The Portfolio's Investment Adviser, will attempt to reduce these
risks through portfolio diversification and by analysis of each issuer and its
ability to make timely payments of income and principal, as well as broad
economic trends and corporate developments.

High Yield Securities ("Junk Bonds")

Investments in securities rated below investment grade that are eligible for
purchase by the Portfolio (i.e., rated lower than Baa or BBB by Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's) are described as
"speculative" by both Moody's and Standard & Poor's. Investment in lower rated
corporate debt securities ("high yield securities" or "junk bonds") generally

4
<PAGE>
provides greater income and increased opportunity for capital appreciation than
investments in higher quality securities, but they also typically entail greater
price volatility and principal and income risk. These high yield securities are
regarded as predominantly speculative with respect to the issuer's continuing
ability to meet principal and interest payments. Analysis of the
creditworthiness of issuers of debt securities that are high yield may be more
complex than for issuers of higher quality debt securities.

High yield securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment grade securities.
The prices of high yield securities have been found to be less sensitive to
interest-rate changes than higher-rated investments, but more sensitive to
adverse economic downturns or individual corporate developments. A projection of
an economic downturn or of a period of rising interest rates, for example, could
cause a decline in high yield security prices because the advent of a recession
could lessen the ability of a highly leveraged company to make principal and
interest payments on its debt securities. If an issuer of high yield securities
defaults, in addition to risking payment of all or a portion of interest and
principal, the Portfolio may incur additional expenses to seek recovery. In the
case of high yield securities structured as zero-coupon or pay-in-kind
securities, their market prices are affected to a greater extent by interest
rate changes, and therefore tend to be more volatile than securities which pay
interest periodically and in cash. The Adviser seeks to reduce these risks
through diversification, credit analysis and attention to current developments
and trends in both the economy and financial markets.

The secondary market on which high yield securities are traded may be less
liquid than the market for higher grade securities. Less liquidity in the
secondary trading market could adversely affect the price at which the Portfolio
could sell a high yield security, and could adversely affect the daily net asset
value of the shares. Adverse publicity and investor perceptions, whether or not
based on fundamental analysis, may decrease the values and liquidity of high
yield securities, especially in a thinly-traded market. When secondary markets
for high yield securities are less liquid than the market for higher grade
securities, it may be more difficult to value the securities because such
valuation may require more research, and elements of judgment may play a greater
role in the valuation because there is less reliable, objective data available.
The Adviser seeks to minimize the risks of investing in all securities through
diversification, in-depth credit analysis and attention to current developments
in interest rates and market conditions.

The use of credit ratings as the sole method of evaluating high yield securities
can involve certain risks. For example, credit ratings evaluate the safety of
principal and interest payments, not the market value risk of high yield
securities. Also, credit rating agencies may fail to change credit ratings in a
timely fashion to reflect events since the security was last rated. The Adviser
does not rely solely on credit ratings when selecting securities for the
Portfolio, and develops its own independent analysis of issuer credit quality.
If a credit rating agency changes the rating of a portfolio security held by the
Portfolio, the Portfolio may retain the portfolio security if the Adviser deems
it in the best interest of shareholders.

5
<PAGE>

Collaterialized Bond Obligations

A Collateralized Bond Obligation (CBO) is a trust typically consisting of
corporate bonds (both US & foreign). CBO'S consist of a portfolio of many
underlying securities where the cashflows from the securitization are derived
from this portfolio. The cashflows from the trust are split into two or more
portions, varying in risk and yield. The riskiest portion is the "Equity"
tranche which bears the bulk of defaults from the bonds in the trust and serves
to protect the other, more senior tranches from default in all but the most
severe circumstances. Since it is partially protected from defaults a senior
tranche from a CBO trust typically has a higher rating and lower yield than its
underlying securities, and can be rated investment grade. Despite the protection
from the equity tranche, CBO tranches can experience substantial losses due to
actual defaults, increased sensitivity to defaults due to collateral default and
disappearance of protecting tranches, market anticipation of defaults, as well
as aversion to CBO securities as a class.

Collaterialized Loan Obligations

A Collateralized Loan Obligation (CLO) is a trust typically consisting of loans
made to issuers (both US and foreign). CLO'S consist of a portfolio of many
underlying loans where the cashflows from the securitization are derived from
this portfolio of loans. The cashflows from the trust are split into two or more
portions, varying in risk and yield. The riskiest portion is the "Equity"
tranche which bears the bulk of defaults from the loans in the trust and serves
to protect the other, more senior tranches from default in all but the most
severe circumstances. Since it is partially protected from defaults a senior
tranche from a CLO trust typically has a higher rating and lower yield than its
underlying securities, and can be rated investment grade. Despite the protection
from the equity tranche, CLO tranches can experience substantial losses due to
actual defaults, increased sensitivity to defaults due to collateral default and
disappearance of protecting tranches, market anticipation of defaults, as well
as aversion to CLO securities as a class.

Convertible Securities

A convertible debt security is a bond, debenture, note, or other security that
entitles the holder to acquire common stock or other equity securities of the
same or a different issuer. A convertible security generally entitles the holder
to receive interest paid or accrued until the convertible security matures or is
redeemed, converted or exchanged. Before conversion, convertible securities have
characteristics similar to non-convertible debt securities. Convertible
securities rank senior to common stock in a corporation's capital structure and,
therefore, generally entail less risk than the corporation's common stock,
although the extent to which such risk is reduced depends in large measure upon
the degree to which the convertible security sells above its value as a fixed
income security.

6
<PAGE>
Because of the conversion feature, the price of the convertible security will
normally fluctuate in some proportion to changes in the price of the underlying
asset, and as such is subject to risks relating to the activities of the issuer
and/or general market and economic conditions. The income component of a
convertible security may tend to cushion the security against declines in the
price of the underlying asset. However, the income component of convertible
securities causes fluctuations based upon changes in interest rates and the
credit quality of the issuer. In addition, convertible securities are often
lower-rated securities.

A convertible security may be subject to redemption at the option of the issuer
at a predetermined price. If a convertible security held by the Portfolio is
called for redemption, the Portfolio would be required to permit the issuer to
redeem the security and convert it to underlying common stock, or would sell the
convertible security to a third party, which may have an adverse effect on the
Portfolio's ability to achieve its investment objective. The Portfolio generally
would invest in convertible securities for their favorable price characteristics
and total return potential and would normally not exercise an option to convert.

Mortgage-Related and Other Asset-Backed Securities

Mortgage-related securities are interests in pools of residential or commercial
mortgage loans, including mortgage loans made by savings and loan institutions,
mortgage bankers, commercial banks and others. Pools of mortgage loans are
assembled as securities for sale to investors by various governmental,
government-related and private organizations. See "Mortgage Pass-Through
Securities." The Portfolio may also invest in debt securities which are secured
with collateral consisting of mortgage-related securities (see "Collateralized
Mortgage Obligations"), and in other types of mortgage-related securities.

Mortgage Pass-Through Securities. Interests in pools of mortgage-related
securities differ from other forms of debt securities, which normally provide
for periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates. Instead, these securities provide a monthly
payment which consists of both interest and principal payments. In effect, these
payments are a "pass-through" of the monthly payments made by the individual
borrowers on their residential or commercial mortgage loans, net of any fees
paid to the issuer or guarantor of such securities. Additional payments are
caused by repayments of principal resulting from the sale of the underlying
property, refinancing or foreclosure, net of fees or costs which may be
incurred. Some mortgage-related securities (such as securities issued by GNMA)
are described as "modified pass-through." These securities entitle the holder to
receive all interest and principal payments owed on the mortgage pool, net of
certain fees, at the scheduled payment dates regardless of whether or not the
mortgagor actually makes the payment.

The rate of prepayments on underlying mortgages will affect the price and
volatility of a mortgage-related security, and may have the effect of shortening
or extending the effective maturity of the security beyond what was anticipated
at the time of purchase. To the extent that unanticipated rates of prepayment on
underlying mortgages increase in the effective maturity of a mortgage-related

7
<PAGE>
security, the volatility of such security can be expected to increase.

The principal governmental guarantor of mortgage-related securities is GNMA.
GNMA is a wholly owned United States Government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the United States Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and backed by pools of mortgages insured by the Federal Housing
Administration (the "FHA"), or guaranteed by the Department of Veterans Affairs
(the "VA").

Government-related guarantors (i.e., not backed by the full faith and credit of
the United States Government) include the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"). FNMA is a
government-sponsored corporation owned entirely by private stockholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
FNMA purchases conventional (i.e., not insured or guaranteed by any government
agency) residential mortgages from a list of approved seller/servicers which
include state and federally chartered savings and loan associations, mutual
savings banks, commercial banks and credit unions and mortgage bankers.
Pass-through securities issued by FNMA are guaranteed as to timely payment of
principal and interest by FNMA but are not backed by the full faith and credit
of the United States Government. FHLMC was created by Congress in 1970 for the
purpose of increasing the availability of mortgage credit for residential
housing. It is a government-sponsored corporation formerly owned by the twelve
Federal Home Loan Banks and now owned entirely by private stockholders. FHLMC
issues Participation Certificates ("PCs") which represent interests in
conventional mortgages from FHLMC's national portfolio. FHLMC guarantees the
timely payment of interest and ultimate collection of principal, but PCs are not
backed by the full faith and credit of the United States Government.

Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers may,
in addition, be the originators and/or servicers of the underlying mortgage
loans as well as the guarantors of the mortgage-related securities. Pools
created by such non-governmental issuers generally offer a higher rate of
interest than government and government-related pools because there are no
direct or indirect government or agency guarantees of payments in the former
pools. However, timely payment of interest and principal of these pools may be
supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance and letters of credit, which may be
issued by governmental entities, private insurers or the mortgage poolers. The
insurance and guarantees are issued by governmental entities, private insurers
and the mortgage poolers. Such insurance and guarantees and the creditworthiness
of the issuers thereof will be considered in determining whether a
mortgage-related security meets the Portfolio's investment quality standards.
There can be no assurance that the private insurers or guarantors can meet their
obligations under the insurance policies or guarantee arrangements. The
Portfolio may buy mortgage-related securities without insurance or guarantees

8
<PAGE>
if, through an examination of the loan experience and practices of the
originator/servicers and poolers, the Adviser determines that the securities
meet the Portfolio's quality standards. Although the market for such securities
is becoming increasingly liquid, securities issued by certain private
organizations may not be readily marketable.

Mortgage-backed securities that are issued or guaranteed by the U.S. Government,
its agencies or instrumentalities, are not subject to the Portfolio's industry
concentration restrictions, set forth below under "Investment Restrictions," by
virtue of the exclusion from that test available to all U.S. Government
securities. In the case of privately issued mortgage-related securities, the
Portfolio takes the position that mortgage-related securities do not represent
interests in any particular "industry" or group of industries. The assets
underlying such securities may be represented by a portfolio of first lien
residential mortgages (including both whole mortgage loans and mortgage
participation interests) or portfolios of mortgage pass-through securities
issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a
mortgage-related security may in turn be insured or guaranteed by the FHA or the
VA. In the case of private issue mortgage-related securities whose underlying
assets are neither U.S. Government securities nor U.S. Government-insured
mortgages, to the extent that real properties securing such assets may be
located in the same geographical region, the security may be subject to a
greater risk of default than other comparable securities in the event of adverse
economic, political or business developments that may affect such region and,
ultimately, the ability of residential homeowners to make payments of principal
and interest on the underlying mortgages.

Collateralized Mortgage Obligations (CMOs). A CMO is a hybrid between a
mortgage-backed bond and a mortgage pass-through security. Similar to a bond,
interest and prepaid principal is paid, in most cases, on a monthly basis. CMOs
may be collateralized by whole mortgage loans, but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
GNMA, FHLMC, or FNMA, and their income streams.

CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity classes receive principal only after the first class has been
retired. An investor is partially guarded against a sooner than desired return
of principal because of the sequential payments.

In a typical CMO transaction, a corporation issues multiple series (e.g., A, B,
C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase
mortgages or mortgage pass-through certificates ("Collateral"). The Collateral
is pledged to a third party trustee as security for the Bonds. Principal and
interest payments from the Collateral are used to pay principal on the Bonds in
the order A, B, C, Z. The Series A, B, and C Bonds all bear current interest.

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Interest on the Series Z Bond is accrued and added to principal and a like
amount is paid as principal on the Series A, B, or C Bond currently being paid
off. When the Series A, B, and C Bonds are paid in full, interest and principal
on the Series Z Bond begins to be paid currently. With some CMOs, the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios.

Commercial Mortgage-Backed Securities include securities that reflect an
interest in, and are secured by, mortgage loans on commercial real property. The
market for commercial mortgage-backed securities developed more recently and in
terms of total outstanding principal amount of issues is relatively small
compared to the market for residential single-family mortgage-backed securities.
Many of the risks of investing in commercial mortgage-backed securities reflect
the risks of investing in the real estate securing the underlying mortgage
loans. These risks reflect the effects of local and other economic conditions on
real estate markets, the ability of tenants to make loan payments, and the
ability of a property to attract and retain tenants. Commercial mortgage-backed
securities may be less liquid and exhibit greater price volatility than other
types of mortgage- or asset-backed securities.

Other Mortgage-Related Securities. Other mortgage-related securities
include securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage loans
on real property, including mortgage dollar rolls, CMO residuals or stripped
mortgage-backed securities ("SMBS"). Other mortgage-related securities may be
equity or debt securities issued by agencies or instrumentalities of the U.S.
Government or by private originators of, or investors in, mortgage loans,
including savings and loan associations, homebuilders, mortgage banks,
commercial banks, investment banks, partnerships, trusts and special purpose
entities of the foregoing.

CMO Residuals. CMO residuals are mortgage securities issued by agencies or
instrumentalities of the U.S. Government or by private originators of, or
investors in, mortgage loans, including savings and loan associations,
homebuilders, mortgage banks, commercial banks, investment banks and special
purpose entities of the foregoing.

The cash flow generated by the mortgage assets underlying a series of CMOs is
applied first to make required payments of principal and interest on the CMOs
and second to pay the related administrative expenses of the issuer. The
residual in a CMO structure generally represents the interest in any excess cash
flow remaining after making the foregoing payments. Each payment of such excess
cash flow to a holder of the related CMO residual represents income and/or a
return of capital. The amount of residual cash flow resulting from a CMO will
depend on, among other things, the characteristics of the mortgage assets, the
coupon rate of each class of CMO, prevailing interest rates, the amount of
administrative expenses and the prepayment experience on the mortgage assets. In
particular, the yield to maturity on CMO residuals is extremely sensitive to
prepayments on the related underlying mortgage assets, in the same manner as an
interest-only ("IO") class of stripped mortgage-backed securities. See "Other
Mortgage-Related Securities--Stripped Mortgage-Backed Securities." In addition,

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if a series of a CMO includes a class that bears interest at an adjustable rate,
the yield to maturity on the related CMO residual will also be extremely
sensitive to changes in the level of the index upon which interest rate
adjustments are based. As described below with respect to stripped
mortgage-backed securities, in certain circumstances the Portfolio may fail to
recoup fully its initial investment in a CMO residual.

CMO residuals are generally purchased and sold by institutional investors
through several investment banking firms acting as brokers or dealers. The CMO
residual market has only very recently developed and CMO residuals currently may
not have the liquidity of other more established securities trading in other
markets. Transactions in CMO residuals are generally completed only after
careful review of the characteristics of the securities in question. In
addition, CMO residuals may, or pursuant to an exemption therefrom, may not have
been registered under the Securities Act of 1933, as amended (the "1933 Act").
CMO residuals, whether or not registered under the 1933 Act, may be subject to
certain restrictions on transferability, and may be deemed "illiquid" and
subject to the Portfolio's limitations on investment in illiquid securities.

Stripped Mortgage-Backed Securities. SMBS are derivative multi-class
mortgage securities. SMBS may be issued by agencies or instrumentalities of the
U.S. Government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose entities of the foregoing.

SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions on a pool of mortgage assets. A
common type of SMBS will have one class receiving some of the interest and most
of the principal from the mortgage assets, while the other class will receive
most of the interest and the remainder of the principal. In the most extreme
case, one class will receive all of the interest (the "IO" class), while the
other class will receive all of the principal (the principal- only or "PO"
class). The yield to maturity on an IO class is extremely sensitive to the rate
of principal payments (including prepayments) on the related underlying mortgage
assets, and a rapid rate of principal payments may have a material adverse
effect on the Portfolio's yield to maturity from these securities. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, the Portfolio may fail to recoup some or all of its initial
investment in these securities even if the security is in one of the highest
rating categories.

Although SMBS are purchased and sold by institutional investors through several
investment banking firms acting as brokers or dealers, these securities were
only recently developed. As a result, established trading markets have not yet
developed and, accordingly, these securities may be deemed "illiquid" and
subject to the Portfolio's limitations on investment in illiquid securities.

Consistent with the Portfolio's investment objectives and policies, the Adviser
also may invest in other types of asset-backed securities.

Loans Participations and Assignments and Other Direct Indebtedness

The Portfolio may invest in fixed- and floating-rate loans, which investments
generally will be in the form of loan participations and assignments of portions
of such loans. Participations and assignments involve special types of risk,
including credit risk, interest rate risk, liquidity risk, and the risks of
being a lender. If the Portfolio purchases a participation, it may only be able
to enforce its rights through the lender, and may assume the credit risk of the
lender in addition to the borrower.

The Portfolio may purchase participations in commercial loans. Such indebtedness
may be secured or unsecured. Loan participations typically represent direct
participation in a loan to a corporate borrower, and generally are offered by
banks or other financial institutions or lending syndicates. The Portfolio may
participate in such syndications, or can buy part of a loan, becoming a part
lender. When purchasing loan participations, the Portfolio assumes the credit
risk associated with the corporate borrower and may assume the credit risk
associated with an interposed bank or other financial intermediary. The
participation interests in which the Portfolio intends to invest may not be
rated by any nationally recognized rating service.

A loan is often administered by an agent bank acting as agent for all holders.
The agent bank administers the terms of the loan, as specified in the loan
agreement. In addition, the agent bank is normally responsible for the
collection of principal and interest payments from the corporate borrower and
the apportionment of these payments to the credit of all institutions which are
parties to the loan agreement. Unless, under the terms of the loan or other
indebtedness, the Portfolio has direct recourse against the corporate borrower,
the Portfolio may have to rely on the agent bank or other financial intermediary
to apply appropriate credit remedies against a corporate borrower.

A financial institution's employment as agent bank might be terminated in the
event that it fails to observe a requisite standard of care or becomes
insolvent. A successor agent bank would generally be appointed to replace the
terminated agent bank, and assets held by the agent bank under the loan
agreement should remain available to holders of such indebtedness. However, if
assets held by the agent bank for the benefit of the Portfolio were determined
to be subject to the claims of the agent bank's general creditors, the Portfolio
might incur certain costs and delays in realizing payment on a loan or loan
participation and could suffer a loss of principal and/or interest. In
situations involving other interposed financial institutions (e.g., an insurance
company or governmental agency) similar risks may arise.

Purchasers of loans and other forms of direct indebtedness depend primarily upon
the creditworthiness of the corporate borrower for payment of principal and
interest. If the Portfolio does not receive scheduled interest or principal
payments on such indebtedness, the Fund's net asset value could be adversely
affected. Loans that are fully secured offer the Portfolio more protection than
an unsecured loan in the event of non-payment of scheduled interest or
principal. However, there is no assurance that the liquidation of collateral
from a secured loan would satisfy the corporate borrower's obligation, or that
the collateral can be liquidated.

The Portfolio may invest in loan participations with credit quality comparable
to that of issuers of its securities investments. Indebtedness of companies
whose creditworthiness is poor involves substantially greater risks, and may be
highly speculative. Some companies may never pay off their indebtedness, or may
pay only a small fraction of the amount owed. Consequently, when investing in

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indebtedness of companies with poor credit, the Portfolio bears a substantial
risk of losing the entire amount invested.

The Portfolio limits the amount of its total assets that it will invest in any
one issuer or in issuers within the same industry (see "Investment
Restrictions"). For purposes of these limits, the Portfolio generally will treat
the corporate borrower as the "issuer" of indebtedness held by the Portfolio. In
the case of loan participations where a bank or other lending institution serves
as a financial intermediary between the Portfolio and the corporate borrower, if
the participation does not shift to the Portfolio the direct debtor-creditor
relationship with the corporate borrower, Securities and Exchange Commission
("SEC") interpretations require the Portfolio to treat both the lending bank or
other lending institution and the corporate borrower as "issuers" for the
purposes of determining whether the Portfolio has invested more than 5% of its
total assets in a single issuer. Treating a financial intermediary as an issuer
of indebtedness may restrict the Portfolio's ability to invest in indebtedness
related to a single financial intermediary, or a group of intermediaries engaged
in the same industry, even if the underlying borrowers represent many different
companies and industries.

Loans and other types of direct indebtedness may not be readily marketable and
may be subject to restrictions on resale. In some cases, negotiations involved
in disposing of indebtedness may require weeks to complete. Consequently, some
indebtedness may be difficult or impossible to dispose of readily at what the
Adviser believes to be a fair price. In addition, valuation of illiquid
indebtedness involves a greater degree of judgment in determining the Fund's net
asset value than if that value were based on available market quotations, and
could result in significant variations in the Fund's daily share price. At the
same time, some loan interests are traded among certain financial institutions
and accordingly may be deemed liquid. As the market for different types of
indebtedness develops, the liquidity of these instruments is expected to
improve. In addition, the Portfolio currently intends to treat indebtedness for
which there is no readily available market as illiquid for purposes of the
Portfolio's limitation on illiquid investments. Investments in loan
participations are considered to be debt obligations for purposes of the
Portfolio's investment restriction relating to the lending of funds or assets by
the Portfolio.

Investments in loans through a direct assignment of the financial institution's
interests with respect to the loan may involve additional risks to the
Portfolio. For example, if a loan is foreclosed, the Portfolio could become part
owner of any collateral, and would bear the costs and liabilities associated
with owning and disposing of the collateral. In addition, it is conceivable that
under emerging legal theories of lender liability, the Portfolio could be held
liable as co-lender. It is unclear whether loans and other forms of direct
indebtedness offer securities law protections against fraud and
misrepresentation. In the absence of definitive regulatory guidance, the
Portfolio relies on the Adviser's research in an attempt to avoid situations
where fraud or misrepresentation could adversely affect the Portfolio.

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<PAGE>
U.S. Government Securities

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

Variable and Floating Rate Instruments

The Portfolio may invest in variable rate and floating rate instruments. These
are securities whose interest rates are reset daily, weekly or at another
periodic date so that the security remains close to par, minimizing changes in
its market value. These securities often have a demand feature which entitles
the investor to repayment of principal plus accrued interest on short notice. In
calculating the maturity of a variable rate or floating rate instrument for the
Portfolio, the date of the next interest rate reset is used.

Zero Coupon Bonds

The Portfolio may invest in zero coupon bonds. These are securities issued at a
discount from their face value that pay all interest and principal upon
maturity. The difference between the purchase price and par is a specific
compounded interest rate for the investor. In calculating the daily income of
the Portfolio, a portion of the difference between a zero coupon bond's purchase
price and its face value is taken into account as income.

Deferred Interest Bonds

A bond such as a zero-coupon bond that does not pay interest until a later date.
Prices for deferred interest bonds are less stable than for a current coupon
bond.

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PIK (Payment-In-Kind) Securities

Bonds or preferred stock whose dividends are in the form of additional bonds or
preferred stock.

Bank Obligations

The Portfolio's assets may be invested in U.S. dollar-denominated negotiable
certificates of deposit, fixed time deposits and bankers' acceptances of banks,
savings and loan associations and savings banks organized under the laws of the
United States or any state thereof, including obligations of non-U.S. branches
of such banks, or of non-U.S. banks or their U.S. or non-U.S. branches, provided
that in each case, such bank has more than $500 million in total assets and has
an outstanding short-term debt issue rated within the highest rating category
for short-term debt obligations by at least two (unless only rated by one)
nationally recognized statistical rating organizations (e.g., Moody's and
Standard & Poor's) or, if unrated, are of comparable quality as determined by or
under the direction of the Board of Trustees. (See "Description of Ratings" in
Appendix.) There is no percentage limitation with respect to investments in
negotiable certificates of deposit, fixed time deposits and bankers' acceptances
of U.S. branches of U.S. banks and U.S. branches of non-U.S. banks that are
subject to the same regulation as U.S. banks. While early withdrawals are not
contemplated, fixed time deposits are not readily marketable and may be subject
to early withdrawal penalties, which may vary. Assets of the Portfolio will not
be invested in obligations of Brown Brothers Harriman & Co. or 59 Wall Street
Distributors, Inc. (the "Distributor"), or in the obligations of the affiliates
of any such organization or in fixed time deposits with a maturity of over seven
calendar days, or in fixed time deposits with a maturity of from two business
days to seven calendar days if more than 10% of the Portfolio's total assets
would be invested in such deposits.

Commercial Paper

The Portfolio's assets may be invested in commercial paper including variable
rate demand master notes issued by U.S. corporations or by non-U.S. corporations
which are direct parents or subsidiaries of U.S. corporations.

Master notes are demand obligations that permit the investment of fluctuating
amounts at varying market rates of interest pursuant to arrangements between the
issuer and a U.S. commercial bank acting as agent for the payees of such notes.
Master notes are callable on demand, but are not marketable to third parties.
Consequently, the right to redeem such notes depends on the borrower's ability
to pay on demand.

At the date of investment, commercial paper must be rated within the highest
rating category for short-term debt obligations by at least two (unless only
rated by one) nationally recognized statistical rating organizations (e.g.,
Moody's and Standard & Poor's) or, if unrated, are of comparable quality as
determined by or under the direction of the Board of Trustees. Any commercial
paper issued by a non-U.S. corporation must be U.S. dollar-denominated and not
subject to non-U.S. withholding tax at the time of purchase.

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<PAGE>
Municipal Obligations

The Portfolio may purchase municipal obligations when the Adviser believes that
they offer favorable rates of income or capital gain potential when compared to
a taxable investment. The term "municipal obligations" generally is understood
to include debt obligations issued by municipalities to obtain funds for various
public purposes, the interest on which is, in the opinion of bond counsel to the
issuer, excluded from gross income for federal income tax purposes. In addition,
if the proceeds from private activity bonds are used for the construction,
repair or improvement of privately operated industrial or commercial facilities,
the interest paid on such bonds may be excluded from gross income for federal
income tax purposes, although current federal tax laws place substantial
limitations on the size of these issues. The Portfolio's distributions of any
interest it earns on municipal obligations will be taxable to shareholders as
ordinary income.

The two principal classifications of municipal obligations are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit, and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenues derived from
a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source, but not from the
general taxing power. Sizable investments in these obligations could involve an
increased risk to the Portfolio should any of the related facilities experience
financial difficulties. Private activity bonds are in most cases revenue bonds
and do not generally carry the pledge of the credit of the issuing municipality.
There are, of course, variations in the security of municipal obligations, both
within a particular classification and between classifications.

The mortgage derivatives that the Portfolio may invest in include interests in
collateralized mortgage obligations and stripped mortgage-backed securities.

Event-linked bonds

Event-linked bonds are fixed income securities, for which the return of
principal and payment of interest is contingent on the non-occurrence of a
specific "trigger" event, such as a hurricane, earthquake, or other physical or
weather-related phenomenon. They may be issued by government agencies, insurance
companies, reinsurers, special purpose corporations or other on-shore or
off-shore entities. If a trigger event causes losses exceeding a specific amount
in the geographic region and time period specified in a bond, the Portfolio
investing in the bond may lose a portion or all of its principal invested in the
bond. If no trigger event occurs, the Portfolio will recover its principal plus
interest. For some event-linked bonds, the trigger event or losses may be based
on company-wide losses, index-portfolio losses, industry indices, or readings of
scientific instruments rather than specified actual losses. Often the
event-linked bonds provide for extensions of maturity that are mandatory, or
optional at the discretion of the issuer, in order to process and audit loss
claims in those cases where a trigger event has, or possibly has, occurred. In
addition to the specified trigger events, event-linked bonds may also expose the

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Portfolio to certain unanticipated risks including but not limited to issuer
(credit) default, adverse regulatory or jurisdictional interpretations, and
adverse tax consequences.

Event-linked bonds are a relatively new type of financial instrument. As such,
there is no significant trading history of these securities, and there can be no
assurance that a liquid market in these instruments will develop. See "Illiquid
Securities" below. Lack of a liquid market may impose the risk of higher
transaction costs and the possibility that the Portfolio may be forced to
liquidate positions when it would not be advantageous to do so. Event-linked
bonds are typically rated, and the Portfolio will only invest in catastrophe
bonds that meet the credit quality requirements for the Portfolio.

Short-Term Investments

Although it is intended that the assets of the Portfolio stay invested in the
securities described above and in the Prospectus to the extent practical in
light of the Portfolio's investment objective and long-term investment
perspective, the Portfolio's assets may be invested in short-term instruments to
meet anticipated expenses or for day-to-day operating purposes. Short-term
instruments consist of foreign and domestic: (i) short-term obligations of
sovereign governments, their agencies, instrumentalities, authorities or
political subdivisions; (ii) other short-term debt securities rated A or higher
by Moody's or Standard & Poor's, or if unrated are of comparable quality in the
opinion of the Investment Adviser; (iii) commercial paper; (iv) bank
obligations, including negotiable certificates of deposit, fixed time deposits
and bankers' acceptances; and (v) repurchase agreements. Time deposits with a
maturity of more than seven days are treated as not readily marketable. At the
time the Portfolio's assets are invested in commercial paper, bank obligations
or repurchase agreements, the issuer must have outstanding debt rated A or
higher by Moody's or Standard & Poor's; the issuer's parent corporation, if any,
must have outstanding commercial paper rated Prime-1 by Moody's or A-1 by
Standard & Poor's; or, if no such ratings are available, the instrument must be
of comparable quality in the opinion of the Investment Adviser. The assets of
the Portfolio may be invested in non-U.S. dollar denominated and U.S. dollar
denominated short-term instruments, including U.S. dollar denominated repurchase
agreements. Cash is held for the Portfolio in demand deposit accounts with the
Portfolio's custodian bank.

Loans of Portfolio Securities

For the purpose of achieving income, the Portfolio may lend its portfolio
securities to brokers, dealers, and other financial institutions, provided: (i)
the loan is secured continuously by collateral consisting of U.S. Government
securities, cash or cash equivalents (negotiable certificates of deposits,
bankers' acceptances or letters of credit) maintained on a daily mark-to-market
basis in an amount at least equal to the current market value of the securities
loaned; (ii) the Portfolio may at any time call the loan and obtain the return
of the securities loaned; (iii) the Portfolio will receive any interest or
dividends paid on the loaned securities; and (iv) the aggregate market value of
securities loaned will not at any time exceed 33 1/3%.

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When-Issued and Delayed Delivery Securities

The Portfolio may purchase municipal securities 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 are fixed on the transaction date. The securities so
purchased are subject to market fluctuation and no interest accrues to the
Portfolio until delivery and payment take place.

At the time the commitment to purchase securities for the Portfolio 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 security
may be valued at less than the purchase price. Commitments for such when-issued
securities are made only when there is an intention of actually acquiring the
securities. To facilitate such acquisitions, a segregated account with Brown
Brothers Harriman & Co. (the "Custodian") is maintained for the Portfolio with
liquid assets in an amount at least equal to such commitments. Such segregated
account consists of liquid assets marked to the market daily, with additional
liquid assets added when necessary to insure that at all times the value of such
account is equal to the commitments. On delivery dates for such transactions,
such obligations are met from maturities or sales of the securities held in the
segregated account and/or from cash flow. If the right to acquire a when-issued
security is disposed of prior to its acquisition, the Portfolio could, as with
the disposition of any other portfolio obligation, incur a gain or loss due to
market fluctuation. When-issued commitments for the Portfolio may not be entered
into if such commitments exceed in the aggregate 15% of the market value of the
Portfolio's total assets, less liabilities other than the obligations created by
when-issued commitments.

Derivative Instruments

In pursuing its investment objective, the Portfolio may purchase and sell
(write) both put options and call options on securities, securities indexes, and
foreign currencies, and enter into interest rate, foreign currency and index
futures contracts and purchase and sell options on such futures contracts
("futures options") for hedging purposes or as part of their overall investment
strategies. The Portfolio also may purchase and sell foreign currency options
for purposes of increasing exposure to a foreign currency or to shift exposure
to foreign currency fluctuations from one country to another. The Portfolio also
may enter into swap agreements with respect to interest rates and indexes of
securities, and to the extent it may invest in foreign currency-denominated
securities, may enter into swap agreements with respect to foreign currencies.
The Portfolio may invest in structured securities. If other types of financial
instruments, including other types of options, futures contracts, or futures
options are traded in the future, the Portfolio may also use those instruments,
provided that the Portfolio's Trustees determine that their use is consistent
with the Portfolio's investment objective.

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<PAGE>
The value of some derivative instruments in which the Portfolio may invest may
be particularly sensitive to changes in prevailing interest rates, and, like the
other investments of the Portfolio, the ability of the Portfolio to successfully
utilize these instruments may depend in part upon the ability of the Adviser to
forecast interest rates and other economic factors correctly. If the Adviser
incorrectly forecasts such factors and has taken positions in derivative
instruments contrary to prevailing market trends, the Portfolio could be exposed
to the risk of loss.

The Portfolio might not employ any of the strategies described below, and no
assurance can be given that any strategy used will succeed. If the Adviser
incorrectly forecasts interest rates, market values or other economic factors in
utilizing a derivatives strategy for the Portfolio, the Portfolio might have
been in a better position if it had not entered into the transaction at all.
Also, suitable derivative transactions may not be available in all
circumstances. The use of these strategies involves certain special risks,
including a possible imperfect correlation, or even no correlation, between
price movements of derivative instruments and price movements of related
investments. While some strategies involving derivative instruments can reduce
the risk of loss, they can also reduce the opportunity for gain or even result
in losses by offsetting favorable price movements in related investments or
otherwise, due to the possible inability of the Portfolio to purchase or sell a
portfolio security at a time that otherwise would be favorable or the possible
need to sell a portfolio security at a disadvantageous time because the
Portfolio is required to maintain asset coverage or offsetting positions in
connection with transactions in derivative instruments, and the possible
inability of the Portfolio to close out or to liquidate its derivatives
positions. In addition, the Portfolio's use of such instruments may cause the
Portfolio to realize higher amounts of short-term capital gains (generally taxed
at ordinary income tax rates) than if it had not used such instruments.

Options on Securities and Indexes

The Portfolio may, to the extent specified herein, purchase and sell both put
and call options on fixed income or other securities or indexes in standardized
contracts traded on foreign or domestic securities exchanges, boards of trade,
or similar entities, or quoted on NASDAQ or on a regulated foreign
over-the-counter market, and agreements, sometimes called cash puts, which may
accompany the purchase of a new issue of bonds from a dealer.

An option on a security (or index) is a contract that gives the holder of the
option, in return for a premium, the right to buy from (in the case of a call)
or sell to (in the case of a put) the writer of the option the security
underlying the option (or the cash value of the index) at a specified exercise
price at any time during the term of the option. The writer of an option on a
security has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price or to pay the exercise
price upon delivery of the underlying security. Upon exercise, the writer of an
option on an index is obligated to pay the difference between the cash value of
the index and the exercise price multiplied by the specified multiplier for the
index option. (An index is designed to reflect features of a particular
financial or securities market, a specific group of financial instruments or
securities, or certain economic indicators.)

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The Portfolio will write call options and put options only if they are
"covered." In the case of a call option on a security, the option is "covered"
if the Portfolio owns the security underlying the call or has an absolute and
immediate right to acquire that security without additional cash consideration
(or, if additional cash consideration is required, cash or other assets
determined to be liquid by the Adviser in accordance with procedures established
by the Portfolio's Board of Trustees, in such amount are segregated by its
custodian) upon conversion or exchange of other securities held by the
Portfolio. For a call option on an index, the option is covered if the Portfolio
maintains with its custodian assets determined to be liquid by the Adviser in
accordance with procedures established by the Portfolio's Board of Trustees, in
an amount equal to the contract value of the index. A call option is also
covered if the Portfolio holds a call on the same security or index as the call
written where the exercise price of the call held is (i) equal to or less than
the exercise price of the call written, or (ii) greater than the exercise price
of the call written, provided the difference is maintained by the Portfolio in
segregated assets determined to be liquid by the Adviser in accordance with
procedures established by the Porfolio's Board of Trustees. A put option on a
security or an index is "covered" if the Portfolio segregates assets determined
to be liquid by the Adviser in accordance with procedures established by the
Portfolio's Board of Trustees equal to the exercise price. A put option is also
covered if the Portfolio holds a put on the same security or index as the put
written where the exercise price of the put held is (i) equal to or greater than
the exercise price of the put written, or (ii) less than the exercise price of
the put written, provided the difference is maintained by the Portfolio in
segregated assets determined to be liquid by the Adviser in accordance with
procedures established by the Portfolio's Board of Trustees.

If an option written by the Portfolio expires unexercised, the Portfolio
realizes a capital gain equal to the premium received at the time the option was
written. If an option purchased by the Portfolio expires unexercised, the
Portfolio realizes a capital loss equal to the premium paid. Prior to the
earlier of exercise or expiration, an exchange traded option may be closed out
by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price, and expiration). There
can be no assurance, however, that a closing purchase or sale transaction can be
effected when the Portfolio desires.

The Portfolio may sell put or call options it has previously purchased, which
could result in a net gain or loss depending on whether the amount realized on
the sale is more or less than the premium and other transaction costs paid on
the put or call option which is sold. Prior to exercise or expiration, an option
may be closed out by an offsetting purchase or sale of an option of the same
series. The Portfolio will realize a capital gain from a closing purchase
transaction if the cost of the closing option is less than the premium received
from writing the option, or, if it is more, the Portfolio will realize a capital
loss. If the premium received from a closing sale transaction is more than the
premium paid to purchase the option, the Portfolio will realizes a capital gain
or, if it is less, the Portfolio will realize a capital loss. The principal
factors affecting the market value of a put or a call option include supply and
demand, interest rates, the current market price of the underlying security or
index in relation to the exercise price of the option, the volatility of the
underlying security or index, and the time remaining until the expiration date.

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The premium paid for a put or call option purchased by the Portfolio is an asset
of the Portfolio. The premium received for an option written by the Portfolio is
recorded as a deferred credit. The value of an option purchased or written is
marked to market daily and is valued at the closing price on the exchange on
which it is traded or, if not traded on an exchange or no closing price is
available, at the mean between the last bid and asked prices.

The Portfolio may write covered straddles consisting of a combination of a call
and a put written on the same underlying security. A straddle will be covered
when sufficient assets are deposited to meet the Portfolio's immediate
obligations. The Portfolio may use the same liquid assets to cover both the call
and put options where the exercise price of the call and put are the same, or
the exercise price of the call is higher than that of the put. In such cases,
the Portfolio will also segregate liquid assets equivalent to the amount, if
any, by which the put is "in the money."

Risks Associated with Options on Securities and Indexes

There are several risks associated with transactions in options on securities
and on indexes. For example, there are significant differences between the
securities and options markets that could result in an imperfect correlation
between these markets, causing a given transaction not to achieve its
objectives. A decision as to whether, when and how to use options involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected events.

During the option period, the covered call writer has, in return for the premium
on the option, given up the opportunity to profit from a price increase in the
underlying security above the exercise price, but, as long as its obligation as
a writer continues, has retained the risk of loss should the price of the
underlying security decline. The writer of an option has no control over the
time when it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it cannot effect
a closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying security at the exercise price. If a put
or call option purchased by the Portfolio is not sold when it has remaining
value, and if the market price of the underlying security remains equal to or
greater than the exercise price (in the case of a put), or remains less than or
equal to the exercise price (in the case of a call), the Portfolio will lose its
entire investment in the option. Also, where a put or call option on a
particular security is purchased to hedge against price movements in a related
security, the price of the put or call option may move more or less than the
price of the related security.

There can be no assurance that a liquid market will exist when the Portfolio
seeks to close out an option position. If the Portfolio were unable to close out
an option that it had purchased on a security, it would have to exercise the
option in order to realize any profit or the option may expire worthless. If the
Portfolio were unable to close out a covered call option that it had written on
a security, it would not be able to sell the underlying security unless the
option expired without exercise. As the writer of a covered call option, the
Portfolio forgoes, during the option's life, the opportunity to profit from
increases in the market value of the security covering the call option above the
sum of the premium and the exercise price of the call.

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If trading were suspended in an option purchased by the Portfolio, the Portfolio
would not be able to close out the option. If restrictions on exercise were
imposed, the Portfolio might be unable to exercise an option it has purchased.
Except to the extent that a call option on an index written by the Portfolio is
covered by an option on the same index purchased by the Portfolio, movements in
the index may result in a loss to the Portfolio; however, such losses may be
mitigated by changes in the value of the Portfolio's securities during the
period the option was outstanding.

Options on Foreign Currencies

The Portfolio may buy or sell put and call options on foreign currencies either
on exchanges or in the over-the-counter market. A put option on a foreign
currency gives the purchaser of the option the right to sell a foreign currency
at the exercise price until the option expires. A call option on a foreign
currency gives the purchaser of the option the right to purchase the currency at
the exercise price until the option expires. Currency options traded on U.S. or
other exchanges may be subject to position limits which may limit the ability of
the Portfolio to reduce foreign currency risk using such options.
Over-the-counter options differ from traded options in that they are two-party
contracts with price and other terms negotiated between buyer and seller, and
generally do not have as much market liquidity as exchange-traded options.

Futures Contracts and Options on Futures Contracts

The Portfolio may invest in interest rate futures contracts and options thereon
("futures options"), and to the extent it may invest in foreign
currency-denominated securities, may also invest in foreign currency futures
contracts and options thereon. An interest rate, foreign currency or index
futures contract provides for the future sale by one party and purchase by
another party of a specified quantity of a financial instrument, foreign
currency or the cash value of an index at a specified price and time. A futures
contract on an index is an agreement pursuant to which two parties agree to take
or make delivery of an amount of cash equal to the difference between the value
of the index at the close of the last trading day of the contract and the price
at which the index contract was originally written. Although the value of an
index might be a function of the value of certain specified securities, no
physical delivery of these securities is made. A public market exists in futures
contracts covering a number of indexes as well as financial instruments and
foreign currencies, including: the S&P 500; the S&P Midcap 400; the Nikkei 225;
the NYSE composite; U.S. Treasury bonds; U.S. Treasury notes; GNMA Certificates;
three-month U.S. Treasury bills; 90-day commercial paper; bank certificates of
deposit; Eurodollar certificates of deposit; the Australian dollar; the Canadian
dollar; the British pound; the German mark; the Japanese yen; the French franc;
the Swiss franc; the Mexican peso; and certain multinational currencies, such as
the euro. It is expected that other futures contracts will be developed and
traded in the future.

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The Portfolio may purchase and write call and put futures options. Futures
options possess many of the same characteristics as options on securities and
indexes (discussed above). A futures option gives the holder the right, in
return for the premium paid, to assume a long position (call) or short position
(put) in a futures contract at a specified exercise price at any time during the
period of the option. Upon exercise of a call option, the holder acquires a long
position in the futures contract and the writer is assigned the opposite short
position.
In the case of a put option, the opposite is true.

To comply with applicable rules of the Commodity Futures Trading Commission
("CFTC") under which the Portfolio avoids being deemed a "commodity pool" or a
"commodity pool operator," the Portfolio intends generally to limit its use of
futures contracts and futures options to "bona fide hedging" transactions, as
such term is defined in applicable regulations, interpretations and practice.
For example, the Portfolio might use futures contracts to hedge against
anticipated changes in interest rates that might adversely affect either the
value of the Portfolio's securities or the price of the securities which the
Portfolio intends to purchase. The Portfolio's hedging activities may include
sales of futures contracts as an offset against the effect of expected increases
in interest rates, and purchases of futures contracts as an offset against the
effect of expected declines in interest rates. Although other techniques could
be used to reduce the Portfolio's exposure to interest rate fluctuations, the
Portfolio may be able to hedge its exposure more effectively and perhaps at a
lower cost by using futures contracts and futures options.

The Portfolio will only enter into futures contracts and futures options which
are standardized and traded on a U.S. or foreign exchange, board of trade, or
similar entity, or quoted on an automated quotation system.

When a purchase or sale of a futures contract is made by the Portfolio, the
Portfolio is required to deposit with its Custodian (or broker, if legally
permitted) a specified amount of assets determined to be liquid by the Adviser
in accordance with procedures established by the Portfolio's Board of Trustees
("initial margin"). The margin required for a futures contract is set by the
exchange on which the contract is traded and may be modified during the term of
the contract. Margin requirements on foreign exchanges may be different than
U.S. exchanges. The initial margin is in the nature of a performance bond or
good faith deposit on the futures contract which is returned to the Portfolio
upon termination of the contract, assuming all contractual obligations have been
satisfied. The Portfolio expects to earn interest income on its initial margin
deposits. A futures contract held by the Portfolio is valued daily at the
official settlement price of the exchange on which it is traded. Each day the
Portfolio pays or receives cash, called "variation margin," equal to the daily
change in value of the futures contract. This process is known as "marking to
market." Variation margin does not represent a borrowing or loan by the
Portfolio but is instead a settlement between the Portfolio and the broker of
the amount one would owe the other if the futures contract expired. In computing
daily net asset value, the Portfolio will mark to market its open futures
positions.

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The Portfolio is also required to deposit and maintain margin with respect to
put and call options on futures contracts written by it. Such margin deposits
will vary depending on the nature of the underlying futures contract (and the
related initial margin requirements), the current market value of the option,
and other futures positions held by the Portfolio.

Although some futures contracts call for making or taking delivery of the
underlying securities, generally these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, the Portfolio realizes a
capital gain, or if it is more, the Portfolio realizes a capital loss.
Conversely, if an offsetting sale price is more than the original purchase
price, the Portfolio realizes a capital gain, or if it is less, the Portfolio
realizes a capital loss. The transaction costs must also be included in these
calculations.

The Portfolio may write covered straddles consisting of a call and a put written
on the same underlying futures contract. A straddle will be covered when
sufficient assets are deposited to meet the Portfolio's immediate obligations.
The Portfolio may use the same liquid assets to cover both the call and put
options where the exercise price of the call and put are the same, or the
exercise price of the call is higher than that of the put. In such cases, the
Portfolio will also segregate liquid assets equivalent to the amount, if any, by
which the put is "in the money."

Other Considerations

When purchasing a futures contract, the Portfolio will maintain with its
Custodian (and mark-to-market on a daily basis) assets determined to be liquid
by the Adviser in accordance with procedures established by the Portfolio's
Board of Trustees, that, when added to the amounts deposited with a futures
commission merchant as margin, are equal to the market value of the futures
contract. Alternatively, the Portfolio may "cover" its position by purchasing a
put option on the same futures contract with a strike price as high or higher
than the price of the contract held by the Portfolio.

When selling a futures contract, a Portfolio will maintain with its Custodian
(and mark-to-market on a daily basis) assets determined to be liquid by the
Adviser in accordance with procedures established by the Portfolio's Board of
Trustees, that are equal to the market value of the instruments underlying the
contract. Alternatively, the Portfolio may "cover" its position by owning the
instruments underlying the contract (or, in the case of an index futures
contract, a portfolio with a volatility substantially similar to that of the
index on which the futures contract is based), or by holding a call option
permitting the Portfolio to purchase the same futures contract at a price no
higher than the price of the contract written by the Portfolio (or at a higher
price if the difference is maintained in liquid assets with the Portfolio's
Custodian).

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futures commission merchant as margin, equal the total market value of the
futures contract underlying the call option. Alternatively, the Portfolio may
cover its position by entering into a long position in the same futures contract
at a price no higher than the strike price of the call option, by owning the
instruments underlying the futures contract, or by holding a separate call
option permitting the Portfolio to purchase the same futures contract at a price
not higher than the strike price of the call option sold by the Portfolio.

When selling a put option on a futures contract, the Portfolio will maintain
with its Custodian (and mark-to-market on a daily basis) assets determined to be
liquid by the Adviser in accordance with procedures established by the
Portfolio's Board of Trustees, that equal the purchase price of the futures
contract, less any margin on deposit. Alternatively, the Portfolio may cover the
position either by entering into a short position in the same futures contract,
or by owning a separate put option permitting it to sell the same futures
contract so long as the strike price of the purchased put option is the same or
higher than the strike price of the put option sold by the Portfolio.

To the extent that securities with maturities greater than one year are used to
segregate assets to cover the Portfolio's obligations under futures contracts
and related options, such use will not eliminate the risk of a form of leverage,
which may tend to exaggerate the effect on net asset value of any increase or
decrease in the market value of the Portfolio's portfolio of securities, and may
require liquidation of portfolio positions when it is not advantageous to do so.
However, any potential risk of leverage resulting from the use of securities
with maturities greater than one year may be mitigated by the overall duration
limit on a Portfolio's portfolio of securities. Thus, the use of a longer-term
security may require the Portfolio to hold offsetting short-term securities to
balance the Portfolio's portfolio of securities such that the Portfolio's
duration does not exceed the maximum permitted for the Portfolio in the
Prospectus.

The requirements for qualification as a regulated investment company also may
limit the extent to which the Portfolio may enter into futures, futures options
or forward contracts. See "Federal Taxes."

Risks Associated with Futures and Futures Options

There are several risks associated with the use of futures contracts and futures
options as hedging techniques. A purchase or sale of a futures contract may
result in losses in excess of the amount invested in the futures contract. There
can be no guarantee that there will be a correlation between price movements in
the hedging vehicle and in the Portfolio's portfolio of securities being hedged.
In addition, there are significant differences between the securities and
futures markets that could result in an imperfect correlation between the
markets, causing a given hedge not to achieve its objectives. The degree of
imperfection of correlation depends on circumstances such as variations in
speculative market demand for futures and futures options on securities,
including technical influences in futures trading and futures options, and
differences between the financial instruments being hedged and the instruments
underlying the standard contracts available for trading in such respects as
interest rate levels, maturities, and creditworthiness of issuers. A decision as
to whether, when and how to hedge involves the exercise of skill and judgment,
and even a well-conceived hedge may be unsuccessful to some degree because of
market behavior or unexpected interest rate trends.

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Futures contracts on U.S. Government securities historically have reacted to an
increase or decrease in interest rates in a manner similar to that in which the
underlying U.S. Government securities reacted. Thus, the anticipated spread
between the price of the futures contract and the hedged security may be
distorted due to differences in the nature of the markets. The spread also may
be distorted by differences in initial and variation margin requirements, the
liquidity of such markets and the participation of speculators in such markets.

Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit establishes
the maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of the current trading
session. Once the daily limit has been reached in a futures contract subject to
the limit, no more trades may be made on that day at a price beyond that limit.
The daily limit governs only price movements during a particular trading day and
therefore does not limit potential losses because the limit may work to prevent
the liquidation of unfavorable positions. For example, futures prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of positions and
subjecting some holders of futures contracts to substantial losses.

There can be no assurance that a liquid market will exist at a time when the
Portfolio seeks to close out a futures or a futures option position, and the
Portfolio would remain obligated to meet margin requirements until the position
is closed. In addition, many of the contracts discussed above are relatively new
instruments without a significant trading history. As a result, there can be no
assurance that an active secondary market will develop or continue to exist.

Reset Options

Typically, a call option or warrant whose strike price may be reset to a lower
strike or a put whose strike price may be reset to a higher strike at some point
during the life of the instrument if the option is out of the money on the reset
date. There may be a limit to the magnitude of the strike price adjustment and
the reset may be triggered by a specific price on the underlying rather than set
on a specific reset date.

"Yield Curve" Options

Options on the shape of the yield curve. Yield curve options allow buyers to
protect themselves from adverse movements in the yield curve. Yield curve
options are often based on the difference in the yields of bonds of different
maturities.

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Additional Risks of Trading Options

Options on securities, futures contracts, options on futures contracts, and
options on currencies may be traded on foreign exchanges. Such transactions may
not be regulated as effectively as similar transactions in the United States;
may not involve a clearing mechanism and related guarantees, and are subject to
the risk of governmental actions affecting trading in, or the prices of, foreign
securities. The value of such positions also could be adversely affected by (i)
other complex foreign political, legal and economic factors, (ii) lesser
availability than in the United States of data on which to make trading
decisions, (iii) delays in the Portfolio's ability to act upon economic events
occurring in foreign markets during non-business hours in the United States,
(iv) the imposition of different exercise and settlement terms and procedures
and margin requirements than in the United States, and (v) lesser trading
volume.

Swap Agreements

The Portfolio may enter into interest rate, index and, to the extent it may
invest in foreign currency-denominated securities, currency exchange rate swap
agreements. These transactions are entered into in a attempt to obtain a
particular return when it is considered desirable to do so, possibly at a lower
cost to the Portfolio than if the Portfolio had invested directly in an
instrument that yielded that desired return. Swap agreements are two party
contracts entered into primarily by institutional investors for periods ranging
from a few weeks to more than one year. In a standard "swap" transaction, two
parties agree to exchange the returns (or differentials in rates of return)
earned or realized on particular predetermined investments or instruments, which
may be adjusted for an interest factor. The gross returns to be exchanged or
"swapped" between the parties are generally calculated with respect to a
"notional amount," i.e., the return on or increase in value of a particular
dollar amount invested at a particular interest rate, in a particular foreign
currency, or in a "basket" of securities representing a particular index. Forms
of swap agreements include interest rate caps, under which, in return for a
premium, one party agrees to make payments to the other to the extent that
interest rates exceed a specified rate, or "cap"; interest rate floors, under
which, in return for a premium, one party agrees to make payments to the other
to the extent that interest rates fall below a specified rate, or "floor"; and
interest rate collars, under which a party sells a cap and purchases a floor or
vice versa in an attempt to protect itself against interest rate movements
exceeding given minimum or maximum levels.

Most swap agreements entered into by the Portfolio would calculate the
obligations of the parties to the agreement on a "net basis." Consequently, the
Portfolio's current obligations (or rights) under a swap agreement will
generally be equal only to the net amount to be paid or received under the
agreement based on the relative values of the positions held by each party to
the agreement (the "net amount"). The Portfolio's current obligations under a
swap agreement will be accrued daily (offset against any amounts owed to the
Portfolio) and any accrued but unpaid net amounts owed to a swap counterparty
will be covered by the segregation of assets determined to be liquid by the

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Adviser in accordance with procedures established by the Portfolio's Board of
Trustees, to avoid any potential leveraging of the Portfolio's portfolio of
securities. Obligations under swap agreements so covered will not be construed
to be "senior securities" for purposes of the Portfolio's investment restriction
concerning senior securities. The Portfolio will not enter into a swap agreement
with any single party if the net amount owed or to be received under existing
contracts with that party would exceed 5% of the Portfolio's assets.

Whether the Portfolio's use of swap agreements will be successful in furthering
its investment objective of total return will depend on the Adviser's ability to
predict correctly whether certain types of investments are likely to produce
greater returns than other investments. Because they are two party contracts and
because they may have terms of greater than seven days, swap agreements may be
considered to be illiquid. Moreover, the Portfolio bears the risk of loss of the
amount expected to be received under a swap agreement in the event of the
default or bankruptcy of a swap agreement counterparty. The Portfolio will enter
into swap agreements only with counterparties that meet certain standards of
creditworthiness. Certain restrictions imposed on the Portfolio by the Internal
Revenue Code may limit the Portfolio's ability to use swap agreements. The swaps
market is a relatively new market and is largely unregulated. It is possible
that developments in the swaps market, including potential government
regulation, could adversely affect the Portfolio's ability to terminate existing
swap agreements or to realize amounts to be received under such agreements.

Certain swap agreements are exempt from most provisions of the Commodity
Exchange Act ("CEA") and, therefore, are not regulated as futures or commodity
option transactions under the CEA, pursuant to regulations approved by the CFTC
effective February 22, 1993. To qualify for this exemption, a swap agreement
must be entered into by "eligible participants," which includes the following,
provided the participants' total assets exceed established levels: a bank or
trust company, savings association or credit union, insurance company,
investment company subject to regulation under the 1940 Act, commodity pool,
corporation, partnership, proprietorship, organization, trust or other entity,
employee benefit plan, governmental entity, broker-dealer, futures commission
merchant, natural person, or regulated foreign person. To be eligible, natural
persons and most other entities must have total assets exceeding $10 million;
commodity pools and employee benefit plans must have assets exceeding $5
million. In addition, an eligible swap transaction must meet three conditions.
First, the swap agreement may not be part of a fungible class of agreements that
are standardized as to their material economic terms. Second, the
creditworthiness of parties with actual or potential obligations under the swap
agreement must be a material consideration in entering into or determining the
terms of the swap agreement, including pricing, cost or credit enhancement
terms. Third, swap agreements may not be entered into and traded on or through a
multilateral transaction execution facility.

This exemption is not exclusive, and participants may continue to rely on
existing exclusions for swaps, such as the Policy Statement issued in July 1989
which recognized a safe harbor for swap transactions from regulation as futures
or commodity option transactions under the CEA or its regulations. The Policy
Statement applies to swap transactions settled in cash that (1) have
individually tailored terms, (2) lack exchange-style offset and the use of a
clearing organization or margin system, (3) are undertaken in conjunction with a
line of business, and (4) are not marketed to the public.

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Structured Securities

The Portfolio may invest in structured securities. Structured notes are
derivative debt securities, the interest rate or principal of which is
determined by an unrelated indicator. Indexed securities include structured
notes as well as securities other than debt securities, the interest rate or
principal of which is determined by an unrelated indicator. Indexed securities
may include a multiplier that multiplies the indexed element by a specified
factor and, therefore, the value of such securities may be very volatile. To the
extent the Portfolio invests in these securities, however, the Adviser analyzes
these securities in its overall assessment of the effective duration of the
Portfolio's portfolio of securities in an effort to monitor the Portfolio's
interest rate risk.

Foreign Investments

The Portfolio may invest its assets in corporate debt securities of foreign
issuers (including preferred or preference stock), certain foreign bank
obligations (see "Bank Obligations") and U.S. dollar or foreign
currency-denominated obligations of foreign governments or their subdivisions,
agencies and instrumentalities, international agencies and supranational
entities.

American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs)

The Portfolio may invest in securities of U.S. or foreign companies which are
issued or settled overseas in the form of ADRs or GDRs or other similar
securities. An ADR is a U.S. dollar-denominated security issued by a U.S. bank
or trust company which represents, and may be converted into, a foreign
security. A GDR is similar, but is issued by a European bank. Depositary
receipts are subject to the same risks as direct investment in foreign
securities.

Emerging Markets

Securities traded in certain emerging market countries, including the emerging
market countries in Eastern Europe, may be subject to risks in addition to risks
typically posed by international investing due to the inexperience of financial
intermediaries, the lack of modern technology, and the lack of a sufficient
capital base to expand business operations. Additionally, former Communist
regimes of a number of Eastern European countries previously expropriated a
large amount of property, the claims on which have not been entirely settled.
There can be no assurance that a Portfolio's investments in Eastern Europe will
not also be expropriated, nationalized or otherwise confiscated.

Brady Bonds

The Portfolio may invest its assets in Brady Bonds. Brady Bonds are securities
created through the exchange of existing commercial bank loans to sovereign
entities for new obligations in connection with debt restructurings under a debt

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restructuring plan introduced by former U.S. Secretary of the Treasury, Nicholas
F. Brady (the "Brady Plan"). Brady Plan debt restructurings have been
implemented in a number of countries, including: Argentina, Bolivia, Bulgaria,
Costa Rica, the Dominican Republic, Ecuador, Jordan, Mexico, Niger, Nigeria, the
Philippines, Poland, Uruguay, and Venezuela. In addition, Brazil has concluded a
Brady-like plan. It is expected that other countries will undertake a Brady Plan
in the future, including Panama and Peru.

Brady Bonds have been issued only recently, and accordingly do not have a long
payment history. Brady Bonds may be collateralized or uncollateralized, are
issued in various currencies (primarily the U.S. dollar) and are actively traded
in the over-the-counter secondary market. Brady Bonds are not considered to be
U.S. Government securities. U.S. dollar-denominated, collateralized Brady Bonds,
which may be fixed rate par bonds or floating rate discount bonds, are generally
collateralized in full as to principal by U.S. Treasury zero coupon bonds having
the same maturity as the Brady Bonds. Interest payments on these Brady Bonds
generally are collateralized on a one-year or longer rolling-forward basis by
cash or securities in an amount that, in the case of fixed rate bonds, is equal
to at least one year of interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's interest payments based on the
applicable interest rate at that time and is adjusted at regular intervals
thereafter. Certain Brady Bonds are entitled to "value recovery payments" in
certain circumstances, which in effect constitute supplemental interest payments
but generally are not collateralized. Brady Bonds are often viewed as having
three or four valuation components: (i) the collateralized repayment of
principal at final maturity; (ii) the collateralized interest payments; (iii)
the uncollateralized interest payments; and (iv) any uncollateralized repayment
of principal at maturity (these uncollateralized amounts constitute the
"residual risk").

Most Mexican Brady Bonds issued to date have principal repayments at final
maturity fully collateralized by U.S. Treasury zero coupon bonds (or comparable
collateral denominated in other currencies) and interest coupon payments
collateralized on an 18-month rolling-forward basis by funds held in escrow by
an agent for the bondholders. A significant portion of the Venezuelan Brady
Bonds and the Argentine Brady Bonds issued to date have principal repayments at
final maturity collateralized by U.S. Treasury zero coupon bonds (or comparable
collateral denominated in other currencies) and/or interest coupon payments
collateralized on a 14-month (for Venezuela) or 12-month (for Argentina)
rolling-forward basis by securities held by the Federal Reserve Bank of New York
as collateral agent.

Brady Bonds involve various risk factors including residual risk and the history
of defaults with respect to commercial bank loans by public and private entities
of countries issuing Brady Bonds. There can be no assurance that Brady Bonds in
which the Portfolio may invest will not be subject to restructuring arrangements
or to requests for new credit, which may cause the Portfolio to suffer a loss of
interest or principal on any of its holdings.

Investment in sovereign debt can involve a high degree of risk. The governmental
entity that controls the repayment of sovereign debt may not be able or willing
to repay the principal and/or interest when due in accordance with the terms of
the debt. A governmental entity's willingness or ability to repay principal and
interest due in a timely manner may be affected by, among other factors, its
cash flow situation, the extent of its foreign reserves, the availability of
sufficient foreign exchange on the date a payment is due, the relative size of
the debt service burden to the economy as a whole, the governmental entity's
policy toward the International Monetary Fund, and the political constraints to

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which a governmental entity may be subject. Governmental entities may also
depend on expected disbursements from foreign governments, multilateral agencies
and others to reduce principal and interest arrearages on their debt. The
commitment on the part of these governments, agencies and others to make such
disbursements may be conditioned on a governmental entity's implementation of
economic reforms and/or economic performance and the timely service of such
debtor's obligations. Failure to implement such reforms, achieve such levels of
economic performance or repay principal or interest when due may result in the
cancellation of such third parties' commitments to lend funds to the
governmental entity, which may further impair such debtor's ability or
willingness to service its debts in a timely manner. Consequently, governmental
entities may default on their sovereign debt. Holders of sovereign debt
(including the Portfolio) may be requested to participate in the rescheduling of
such debt and to extend further loans to governmental entities. There is no
bankruptcy proceeding by which sovereign debt on which governmental entities
have defaulted may be collected in whole or in part.

The Portfolio's investments in foreign currency denominated debt obligations and
hedging activities will likely produce a difference between its book income and
its taxable income. This difference may cause a portion of the Portfolio's
income distributions to constitute returns of capital for tax purposes or
require the Portfolio to make distributions exceeding book income to qualify as
a regulated investment company for federal tax purposes.

The Portfolio will consider an issuer to be economically tied to a country with
an emerging securities market if (1) the issuer is organized under the laws of,
or maintains its principal place of business in, the country, (2) its securities
are principally traded in the country's securities markets, or (3) the issuer
derived at least half of its revenues or profits from goods produced or sold,
investments made, or services performed in the country, or has at least half of
its assets in that country.

Foreign Currency Transactions

The Portfolio may engage in foreign currency transactions. These transactions
may be conducted at the prevailing spot rate for purchasing or selling currency
in the foreign exchange market. The Portfolio also has authority to enter into
forward foreign currency exchange contracts involving currencies of the
different countries in which the fund invests as a hedge against possible
variations in the foreign exchange rates between these currencies and the U.S.
dollar. This is accomplished through contractual agreements to purchase or sell
a specified currency at a specified future date and price set at the time of the
contract.

Transaction hedging is the purchase or sale of forward foreign currency
contracts with respect to specific receivables or payables of the Portfolio,
accrued in connection with the purchase and sale of its portfolio securities
quoted in foreign currencies. Hedging of the portfolio is the use of forward
foreign currency contracts to offset portfolio security positions denominated or
quoted in such foreign currencies. There is no guarantee that the Portfolio will
be engaged in hedging activities when adverse exchange rate movements occur. The
Portfolio will not attempt to hedge all of its foreign portfolio positions and
will enter into such transactions only to the extent, if any, deemed appropriate
by the Adviser.

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<PAGE>
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the Portfolio to hedge against a devaluation that is so
generally anticipated that the Portfolio is not able to contract to sell the
currency at a price above the devaluation level it anticipates.

The cost to the Portfolio of engaging in foreign currency transactions varies
with such factors as the currency involved, the size of the contract, the length
of the contract period, differences in interest rates between the two currencies
and the market conditions then prevailing. Since transactions in foreign
currency and forward contracts are usually conducted on a principal basis, no
fees or commissions are involved. The Portfolio may close out a forward position
in a currency by selling the forward contract or by entering into an offsetting
forward contract.

The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. Using forward contracts to
protect the value of the Portfolio's securities against a decline in the value
of a currency does not eliminate fluctuations in the underlying prices of the
securities. It simply establishes a rate of exchange which the Portfolio can
achieve at some future point in time. The precise projection of short-term
currency market movements is not possible, and short-term hedging provides a
means of fixing the U.S. dollar value of only a portion of the Portfolio's
foreign assets.

While the Portfolio will enter into forward contracts to reduce currency
exchange rate risks, transactions in such contracts involve certain other risks.
While the Portfolio may benefit from such transactions, unanticipated changes in
currency prices may result in a poorer overall performance for the Portfolio
than if it had not engaged in any such transactions. Moreover, there may be
imperfect correlation between the Portfolio's holdings of securities quoted or
denominated in a particular currency and forward contracts entered into by the
Portfolio. Such imperfect correlation may cause the Portfolio to sustain losses
which will prevent the Portfolio from achieving a complete hedge or expose the
Portfolio to risk of foreign exchange loss.

Over-the-counter markets for trading foreign forward currency contracts offer
less protection against defaults than is available when trading in currency
instruments on an exchange. Since a forward foreign currency exchange contract
is not guaranteed by an exchange or clearinghouse, a default on the contract
would deprive the Portfolio of unrealized profits or force the Portfolio to
cover its commitments for purchase or resale, if any, at the current market
price.

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If the Portfolio enters into a forward contract to purchase foreign currency,
the Custodian or the Adviser will segregate liquid assets.

Forward Exchange Contracts

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

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

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

Eurodollar Instruments

Eurodollar instruments are bonds of corporate and government issuers that pay
interest and principal in U.S. dollars but are issued in markets outside the
United States, primarily in Europe. The Portfolio may also invest in Eurodollar
Certificates of Deposit ("ECDs") and Eurodollar Time Deposits ("ETDs"). ECDs are
U.S. dollar-denominated certificates of deposit issued by non-U.S. branches of
domestic banks and ETDs are U.S. dollar-denominated deposits in a non-U.S.
branch of a U.S. bank or in a non-U.S. bank. These investments involve risks
that are different from investments in securities issued by U.S. issuers,
including potential unfavorable political and economic developments, non-U.S.
withholding or other taxes, seizure of non-U.S. deposits, currency controls,
interest limitations or other governmental restrictions which might affect
payment of principal or interest.

33
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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.

Warrants to Purchase Securities

The Portfolio may invest in or acquire warrants to purchase equity or fixed
income securities. Bonds with warrants attached to purchase equity securities
have many characteristics of convertible bonds and their prices may, to some
degree, reflect the performance of the underlying stock. Bonds also may be
issued with warrants attached to purchase additional fixed income securities at
the same coupon rate. A decline in interest rates would permit the Portfolio to
buy additional bonds at the favorable rate or to sell the warrants at a profit.
If interest rates rise, the warrants would generally expire with no value.

Borrowings

The Portfolio may borrow for temporary administrative purposes. This borrowing
may be unsecured. Provisions of the 1940 Act require the Portfolio to maintain
continuous asset coverage (that is, total assets including borrowings, less
liabilities exclusive of borrowings) of 300% of the amount borrowed, with an
exception for borrowings not in excess of 5% of the Portfolio's total assets
made for temporary administrative purposes. Any borrowings for temporary
administrative purposes in excess of 5% of the Portfolio's total assets must
maintain continuous asset coverage. If the 300% asset coverage should decline as
a result of market fluctuations or other reasons, the Portfolio may be required
to sell some of its portfolio holdings within three days to reduce the debt and
restore the 300% asset coverage, even though it may be disadvantageous from an
investment standpoint to sell securities at that time. As noted below, the
Portfolio also may enter into certain transactions, including reverse repurchase
agreements, mortgage dollar rolls, and sale-buybacks, that can be viewed as
constituting a form of borrowing or financing transaction by the Portfolio. To
the extent the Portfolio covers its commitment under a reverse repurchase
agreement (or economically similar transaction) by the segregation of assets
determined in accordance with procedures adopted by the Portfolio's Trustees,
equal in value to the amount of the Portfolio's commitment to repurchase, such
an agreement will not be considered a "senior security" by the Portfolio and
therefore will not be subject to the 300% asset coverage requirement otherwise
applicable to borrowings by the Portfolio. Borrowing will tend to exaggerate the
effect on net asset value of any increase or decrease in the market value of the
Portfolio's portfolio of securities. Money borrowed will be subject to interest
costs which may or may not be recovered by appreciation of the securities
purchased. The Portfolio also may be required to maintain minimum average
balances in connection with such borrowing or to pay a commitment or other fee
to maintain a line of credit; either of these requirements would increase the
cost of borrowing over the stated interest rate.

34
<PAGE>
In addition to borrowing for temporary purposes, the Portfolio may enter into
reverse repurchase agreements, mortgage dollar rolls, and economically similar
transactions. A reverse repurchase agreement involves the sale of a
portfolio-eligible security by the Portfolio, coupled with its agreement to
repurchase the instrument at a specified time and price. Under a reverse
repurchase agreement, the Portfolio continues to receive any principal and
interest payments on the underlying security during the term of the agreement.
The Portfolio typically will segregate assets determined to be liquid by the
Adviser in accordance with procedures established by the Portfolio's Trustees,
equal (on a daily mark-to-market basis) to its obligations under reverse
repurchase agreements. However, reverse repurchase agreements involve the risk
that the market value of securities retained by the Portfolio may decline below
the repurchase price of the securities sold by the Portfolio which it is
obligated to repurchase. To the extent that positions in reverse repurchase
agreements are not covered through the segregation of liquid assets at least
equal to the amount of any forward purchase commitment, such transactions would
be subject to the Portfolio's limitations on borrowings, which would restrict
the aggregate of such transactions (plus any other borrowings) to 33 1/3% of the
Portfolio's total assets.

A "mortgage dollar roll" is similar to a reverse repurchase agreement in certain
respects. In a "dollar roll" transaction the Portfolio sells a mortgage-related
security, such as a security issued by the Government National Mortgage
Association ("GNMA"), to a dealer and simultaneously agrees to repurchase a
similar security (but not the same security) in the future at a pre-determined
price. A "dollar roll" can be viewed, like a reverse repurchase agreement, as a
collateralized borrowing in which the Portfolio pledges a mortgage-related
security to a dealer to obtain cash. Unlike in the case of reverse repurchase
agreements, the dealer with which the Portfolio enters into a dollar roll
transaction is not obligated to return the same securities as those originally
sold by the Portfolio, but only securities which are "substantially identical."
To be considered "substantially identical," the securities returned to the
Portfolio generally must: (1) be collateralized by the same types of underlying
mortgages; (2) be issued by the same agency and be part of the same program; (3)
have a similar original stated maturity; (4) have identical net coupon rates;
(5) have similar market yields (and therefore price); and (6) satisfy "good
delivery" requirements, meaning that the aggregate principal amounts of the
securities delivered and received back must be within 2.5% of the initial amount
delivered.

The Portfolio's obligations under a dollar roll agreement must be covered by
segregated liquid assets equal in value to the securities subject to repurchase
by the Portfolio. As with reverse repurchase agreements, to the extent that
positions in dollar roll agreements are not covered by segregated liquid assets
at least equal to the amount of any forward purchase commitment, such
transactions would be subject to the Portfolio's limitations on borrowings.
Furthermore, because dollar roll transactions may be for terms ranging between
one and six months, dollar roll transactions may be deemed "illiquid" and
subject to a Portfolio's overall limitations on investments in illiquid
securities. The Portfolio also may effect simultaneous purchase and sale
transactions that are known as "sale-buybacks". A sale-buyback is similar to a
reverse repurchase agreement, except that in a sale-buyback, the counterparty
who purchases the security is entitled to receive any principal or interest
payments made on the underlying security pending settlement of the Portfolio's
repurchase of the underlying security. The Portfolio's obligations under a
sale-buyback typically would be offset by liquid assets equal in value to the
amount of the Portfolio's forward commitment to repurchase the subject security.

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<PAGE>
Short Sales Against the Box

The Portfolio may sell securities "short against the box." A short sale involves
the Portfolio borrowing securities from a broker and selling the borrowed
securities. The Portfolio has an obligation to return securities identical to
the borrowed securities to the broker. In a short sale against the box, the
Portfolio at all times owns an equal amount of the security sold short or
securities convertible into or exchangeable for, with or without payment of
additional consideration, an equal amount of the security sold short. The
Portfolio intends to use short sales against the box to hedge. For example, when
the Portfolio believes that the price of a current portfolio security may
decline, the Portfolio may use a short sale against the box to lock in a sale
price for a security rather than selling the security immediately. In such a
case, any future losses in the Portfolio's long position should be offset by a
gain in the short position and, conversely, any gain in the long position should
be reduced by a loss in the short position.

If the Portfolio effects a short sale against the box at a time when it has an
unrealized gain on the security, it may be required to recognize that gain as if
it had actually sold the security (a constructive sale) on the date it effects
the short sale. However, such constructive sale treatment may not apply if the
Portfolio closes out the short sale with securities other than the appreciated
securities held at the time of the short sale provided that certain other
conditions are satisfied. Uncertainty regarding certain tax consequences of
effecting short sales may limit the extent to which the Portfolio may make short
sales against the box.

Repurchase Agreements

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

<PAGE>
Reverse Repurchase Agreements

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

Rule 144A Securities

The Investment Adviser may, on behalf of the Portfolio, purchase securities that
are not registered under the 1933 Act, but that can be sold to "qualified
institutional buyers" in accordance with the requirements stated in Rule 144A
under the 1933 Act (Rule 144A Securities). A Rule 144A Security may be
considered illiquid and therefore subject to the 15% limitation on the purchase
of illiquid securities, unless it is determined on an ongoing basis that an
adequate trading market exists for the security. Guidelines have been adopted
and the daily function of determining and monitoring liquidity of Rule 144A
Securities has been delegated to the Investment Adviser. All relevant factors
will be considered in determining the liquidity of Rule 144A Securities and all
investments in Rule 144A Securities will be carefully monitored.

<PAGE>
Illiquid Securities

The Portfolio may invest up to 15% of its net assets in illiquid securities. The
term "illiquid securities" for this purpose means securities that cannot be
disposed of within seven days in the ordinary course of business at
approximately the amount at which the Portfolio has valued the securities.
Illiquid securities are considered to include, among other things, written
over-the-counter options, securities or other liquid assets being used as cover
for such options, repurchase agreements with maturities in excess of seven days,
certain loan participation interests, fixed time deposits which are not subject
to prepayment or provide for withdrawal penalties upon prepayment (other than
overnight deposits), and other securities whose disposition is restricted under
the federal securities laws (other than securities issued pursuant to Rule 144A
under the 1933 Act and certain commercial paper that the Adviser has determined
to be liquid under procedures approved by the Portfolio's Trustees).

Illiquid securities may include privately placed securities, which are sold
directly to a small number of investors, usually institutions. Unlike public
offerings, such securities are not registered under the federal securities laws.
Although certain of these securities may be readily sold, others may be
illiquid, and their sale may involve substantial delays and additional costs.

Investment Company Securities

Subject to applicable statutory and regulatory limitations, the assets of the
Portfolio may be invested in shares of other investment companies. Under the
1940 Act, the assets of the Portfolio may be invested in shares of other
investment companies in connection with a merger, consolidation, acquisition or
reorganization or if immediately after such investment (i) 10% or less of the
market value of the Portfolio's total assets would be so invested, (ii) 5% or
less of the market value of the Portfolio's total assets would be invested in
the shares of any one such company, and (iii) 3% or less of the total
outstanding voting stock of any other investment company would be owned by the
Portfolio. As a shareholder of another investment company, the Portfolio would
bear, along with other shareholders, its pro rata portion of the other
investment company's expenses, including advisory fees. These expenses would be
in addition to the advisory and other expenses that a Portfolio bears directly
in connection with its own operations.

INVESTMENT RESTRICTIONS

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

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

<PAGE>
Except that the Corporation may invest all of the Fund's assets in an open-end
investment company with substantially the same investment objective, policies
and restrictions as the Fund, the Portfolio and the Corporation, with respect to
the Fund, may not:

(1) invest in a security if, as a result of such investment, more than 25% of
its total assets (taken at market value at the time of such investment) would be
invested in the securities of issuers in any particular industry, or in
industrial development revenue bonds based, directly or indirectly, on the
credit of private entities in any one industry; except that this restriction
does not apply to securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities (or repurchase agreements with respect thereto).
Investments in utilities, gas, electric, water and telephone companies will be
considered as being in separate industries;

(2) with respect to 75% of its assets, invest in a security if, as a result of
such investment, more than 5% of its total assets (taken at market value at the
time of such investment) would be invested in the securities of any one issuer,
except that this restriction does not apply to securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities. For the purpose of
this restriction, each state and each separate political subdivision, agency,
authority or instrumentality of such state, each multi-state agency or
authority, and each guarantor, if any, are treated as separate issuers of
Municipal Bonds;

(3) with respect to 75% of its assets, invest in a security if, as a result of
such investment, it would hold more than 10% (taken at the time of such
investment) of the outstanding voting securities of any one issuer;

(4) purchase or sell real estate, although it may purchase securities secured by
real estate or interests therein, or securities issued by companies which invest
in real estate, or interests therein;

(5) purchase or sell commodities or commodities contracts or oil, gas or mineral
programs. This restriction shall not prohibit the Portfolio, subject to
restrictions described in the Prospectus and elsewhere in this Statement of
Additional Information, from purchasing, selling or entering into futures
contracts, options on futures contracts, foreign currency forward contracts,
foreign currency options, or any interest rate, securities-related or foreign
currency-related hedging instrument, including swap agreements and other
derivative instruments, subject to compliance with any applicable provisions of
the federal securities or commodities laws;

(6) purchase securities on margin, except for use of short-term credit necessary
for clearance of purchases and sales of portfolio securities, but it may make
margin deposits in connection with transactions in options, futures, and options
on futures;

<PAGE>
(7) borrow money, issue senior securities, or pledge, mortgage or hypothecate
its assets, except that the Portfolio may (i) borrow from banks or enter into
reverse repurchase agreements, or employ similar investment techniques, and
pledge its assets in connection therewith, but only if immediately after each
borrowing there is asset coverage of 300% and (ii) enter into transactions in
options, futures, options on futures, and other derivative instruments as
described in the Prospectus and in this Statement of Additional Information (the
deposit of assets in escrow in connection with the writing of covered put and
call options and the purchase of securities on a when-issued or delayed delivery
basis, collateral arrangements with respect to initial or variation margin
deposits for futures contracts and commitments entered into under swap
agreements or other derivative instruments, will not be deemed to be pledges of
the Portfolio's assets);

(8) lend any funds or other assets, except that the Portfolio may, consistent
with its investment objective and policies: (a) invest in debt obligations,
including bonds, debentures, or other debt securities, bankers' acceptances and
commercial paper, even though the purchase of such obligations may be deemed to
be the making of loans, (b) enter into repurchase agreements, and (c) lend its
portfolio securities in an amount not to exceed one-third of the value of its
total assets, provided such loans are made in accordance with applicable
guidelines established by the SEC and the Trustees of the Portfolio;

(9) act as an underwriter of securities of other issuers, except to the extent
that in connection with the disposition of portfolio securities, it may be
deemed to be an underwriter under the federal securities laws;

(10) maintain a short position, or purchase, write or sell puts, calls,
straddles, spreads or combinations thereof, except as set forth in the
Prospectus and in this Statement of Additional information for transactions in
options, futures, options on futures, and transactions arising under swap
agreements or other derivative instruments.

Non-Fundamental Restrictions. The following polices are not fundamental
and may be changed without shareholder approval. The Portfolio or the
Corporation, on behalf of the Fund, may not as a matter of operating policy
(except that the Corporation may invest all of the Fund's assets in an open-end
investment company with substantially the same investment objective, policies
and restrictions as the Fund):

(i) invest more than 15% of the net assets of the Portfolio (taken at
market value at the time of the investment) in "illiquid securities,"
illiquid securities being defined to include securities subject to
legal or contractual restrictions on resale;

(ii) invest more than 5% of the assets of the Portfolio (taken at market
value at the time of investment) in any combination of interest only,
principal only, or inverse floating rate securities;

40
<PAGE>

(iii) 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;

(iv) invest less than 65% of the value of the total assets of the Portfolio
in high yield securities rated below investment grade or if unrated,
determined by the Adviser to be of comparable quality.

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

Under the 1940 Act, a "senior security" does not include any promissory note or
evidence of indebtedness where such loan is for temporary purposes only and in
an amount not exceeding 5% of the value of the total assets of the issuer at the
time the loan is made. A loan is presumed to be for temporary purposes if it is
repaid within sixty days and is not extended or renewed. Notwithstanding the
provisions of fundamental investment restriction (7) above, the Portfolio may
borrow money for temporary administrative purposes. To the extent that
borrowings for temporary administrative purposes exceed 5% of the total assets
of the Portfolio such excess shall be subject to the 300% asset coverage
requirement of that restriction.

To the extent the Portfolio covers its commitment under a reverse repurchase
agreement (or economically similar transaction) by the segregation of assets
determined to be liquid in accordance with procedures adopted by the Portfolio's
Trustees, equal in value to the amount of the Portfolio's commitment to
repurchase, such an agreement will not be considered a "senior security" by the
Portfolio and therefore will not be subject to the 300% asset coverage
requirement otherwise applicable to borrowings by the Portfolio.

<PAGE>
taken at market value, together with all other assets of the Portfolio which are
illiquid or are otherwise not readily marketable. However, if an OTC option is
sold by the Portfolio to a primary U.S. Government securities dealer recognized
by the Federal Reserve Bank of New York and if the Portfolio has the
unconditional contractual right to repurchase such OTC option from the dealer at
a predetermined price, then the Portfolio will treat as illiquid such amount of
the underlying securities equal to the repurchase price less the amount by which
the option is "in-the-money" (i.e., current market value of the underlying
securities minus the option's strike price). The repurchase price with the
primary dealers is typically a formula price which is generally based on a
multiple of the premium received for the option, plus the amount by which the
option is "in-the-money." This policy is not a fundamental policy of the
Portfolio and may be amended by the Portfolio's Trustees without the approval of
shareholders. However, the Portfolio will not change or modify this policy prior
to the change or modification by the SEC staff of its position.

Percentage and Rating Restrictions. If a percentage or rating restriction on
investment or utilization of assets set forth above or referred to in the
Prospectus is adhered to at the time an investment is made or assets are so
utilized, a later change in percentage resulting from changes in the value of
the portfolio securities or a later change in the rating of a portfolio security
is not considered a violation of policy.

DIRECTORS, TRUSTEES AND OFFICERS

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

The Corporation's Directors, in addition to supervising the actions of
the Administrator of the Corporation and Distributor of the Fund, as set forth
below, decide upon matters of general policy with respect to the Corporation.
The Portfolio's Trustees, in addition to supervising the actions of the
Portfolio's Investment Adviser, decide upon matters of general policy with
respect to the Portfolio.

Because of the services rendered to the Portfolio by the Investment
Adviser and to the Corporation and the Portfolio by their respective
Administrators, the Corporation and the Portfolio require no employees, and
their respective officers (all of whom are employed by 59 Wall Street
Administrators), other than the Chairman, receive no compensation from the Fund
or Portfolio.

The Directors of the Corporation, Trustees of the Portfolio and
executive officers of the Corporation and the Portfolio, their principal
occupations during the past five years (although their titles may have varied
during the period) and business addresses are:

DIRECTORS OF THE CORPORATION AND TRUSTEES OF THE PORTFOLIO

J.V. SHIELDS, JR.* - Chairman of the Board and Director; Trustee of The
59 Wall Street Trust; Trustee of the Portfolio and the BBH Portfolios(1) (since
October 1999); Managing Director, Chairman and Chief Executive Officer of
Shields & Company; Chairman of Capital Management Associates, Inc.; Director of
Flowers Industries, Inc.(2). Vice Chairman and Trustee of New York Racing
Association. His business address is Shields & Company, 140 Broadway, New York,
NY 10005.

<PAGE>

EUGENE P. BEARD** - Director; Trustee of The 59 Wall Street Trust;
Trustee of the Portfolio and the BBH Portfolios (since October 1999); Executive
Vice President - 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 Portfolio and the BBH Portfolios (since October 1999); Retired;
Vice President and Investment Manager of AT&T Investment Management Corporation
(prior to October 1997); Director of Dreyfus Mutual Funds, Jeffrey Co. and
Heitman Financial. His business address is 3 Tall Oaks Drive, Warren, NJ 07059.

ALAN G. LOWY** - Director; Trustee of The 59 Wall Street Trust; Trustee
of the Portfolio and the BBH Portfolios (since October 1999); Private Investor.
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 Portfolio and the BBH Portfolios (since October 1999);
Retired, Executive Vice President and Chief Financial Officer of Richard K.
Mellon and Sons (prior to June 1998); Treasurer of Richard King Mellon
Foundation (prior to June 1998); Vice President of the Richard King Mellon
Foundation; Trustee, R.K. Mellon Family Trusts; General Partner, Mellon Family
Investment Company IV, V and VI; Director of Aerostructures Corporation (since
1996) (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 Portfolio and the BBH
Portfolios; Trustee of Dow Jones Islamic Market Index Portfolio (since March
1999); Retired; Director of Investments, Pennsylvania Public School Employees'
Retirement System (prior to December 1997). 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 Portfolio and the BBH
Portfolios; Trustee of Dow Jones Islamic Market Index Portfolio (since March
1999); Retired. 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 Portfolio and the BBH
Portfolios; Physician, Private Practice. His business address is 7117 Nevis
Road, Bethesda, MD 20817.

<PAGE>
J. ANGUS IVORY - Director (since October 1999); Trustee of The 59 Wall
Street Trust (since October 1999); Trustee of the Portfolio and the BBH
Portfolios (since October 1999); Trustee of Dow Jones Islamic Market Index
Portfolio (since March 1999); Retired [CONFIRM W/BBH]; Director of Brown
Brothers Harriman Ltd., subsidiary of Brown Brothers Harriman & Co.; Director of
Old Daily Saddlery; Advisor, RAF Central Fund; Committee Member, St. Thomas
Hospital Pain Clinic (since 1999).

OFFICERS OF THE CORPORATION AND THE PORTFOLIO

PHILIP W. COOLIDGE -- President; President of the Portfolio and the BBH
Portfolios; 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").

MOLLY S. MUGLER -- Secretary; Secretary of the Portfolio and the BBH
Portfolios; Vice President and Secretary of SFG; Secretary of 59 Wall Street
Distributors and 59 Wall Street Administrators.

LINWOOD C. DOWNS - Treasurer; Treasurer of the Portfolio and the BBH
Portfolios; Senior Vice President and Treasurer of SFG.

SUSAN JAKUBOSKI - Assistant Treasurer; Assistant Secretary and
Assistant Treasurer of the Portfolio and the BBH Portfolios; Vice President,
Assistant Secretary and Assistant Treasurer of Signature Financial Group
(Cayman) Limited.

CHRISTINE D. DORSEY -- Assistant Secretary; Assistant Secretary of the
Portfolio and the BBH Portfolios; Vice President of SFG (since January 1996);
Paralegal and Compliance Officer, various financial companies (July 1992 to
January 1996).

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

*Mr. Shields is an "interested person" of the Corporation because of his
affiliation with a registered broker-dealer. Except for Mr. Shields, no Director
or Trustee is an "interested person" of the Corporation or the Portfolio as that
term is defined in the 1940 Act.

44
<PAGE>
**These Directors are members of the Audit Committee of the Corporation.

(1) The Portfolios consist of the following active investment companies:
BBH U.S. Money Market Portfolio, BBH U.S. Equity Portfolio, BBH
European Equity Portfolio, BBH Pacific Basin Equity Portfolio, BBH
International Equity Portfolio, BBH Broad Market Fixed Income Portfolio
and BBH Global Equity Portfolio and the following inactive investment
companies: BBH U.S. Balanced Growth Portfolio and BBH Intermediate
Tax-Exempt Bond 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 listed above holds the equivalent position with The 59
Wall Street Trust. The address of each officer is 21 Milk Street, Boston,
Massachusetts 02109. Messrs. Coolidge and Downs and Mss. Mugler, Jakuboski and
Dorsey also hold similar positions with other investment companies for which
affiliates of 59 Wall Street Distributors serve as the principal underwriter.

Directors of the Corporation/Trustees of the Portfolio

The Directors of the Corporation and Trustees of the Portfolio 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 Portfolio and any
other active BBH Portfolio having the same Board of Trustees based upon their
respective net assets. In addition, each series of the Corporation and The 59
Wall Street Trust, the Portfolio and each other active BBH Portfolio which has
commenced operations pays an annual fee to each Director/Trustee of $1,000.

45
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>

Pension or Total
Aggregate Retirement Compensation
Compensation Benefits Accrued Estimated Annual from Fund
Name of Person, from the as Part of Benefits upon Complex* Paid
Position Fund** Fund Expenses Retirement to Directors/Trustees*

J.V. Shields, Jr., $250 none none $36,000
Director/Trustee

Eugene P. Beard, $250 none none $31,000
Director/Trustee

Richard L. Carpenter, $250 none none $31,000
Director/Trustee

Clifford A. Clark, $250 none none $31,000
Director/Trustee

David P. Feldman, $250 none none $31,000
Director/Trustee

J. Angus Ivory, $250 none none $31,000
Director/Trustee

Alan G. Lowy, $250 none none $31,000
Director/Trustee

Arthur D. Miltenberger, $250 none none $31,000
Director/Trustee

David M. Seitzman, $250 none none $31,000
Director/Trustee
<FN>

* The Fund Complex consists of the Corporation, The 59 Wall Street Trust (which
currently consists of four series) and the seven active BBH Portfolios.

**Estimated to be paid as of October 31, 2000.
</FN>
</TABLE>

By virtue of the responsibilities assumed by Brown Brothers Harriman & Co. under
the Investment Advisory Agreement with the Portfolio, and by Brown Brothers
Harriman & Co. under the Administration Agreement with the Corporation, and by
Brown Brothers Harriman Trust Company LLC of New York ("Brown Brothers Harriman
Trust Company LLC") under the Administration Agreement with the Portfolio (see
"Investment Adviser" and "Administrator"), the Corporation and the Portfolio do
not require employees other than its officers, and none of its officers devote
full time to the affairs of the Corporation or the Portfolio, as the case may
be, or, other than the Chairman, receive any compensation from the Corporation
or the Portfolio. Prior to May 6, 2000, the name of Brown Brothers Harriman
Trust Company LLC was Brown Brothers Harriman Trust Company.

As of April 30, 2000, the Corporation's Directors and officers as a
group beneficially owned less than 1% of the outstanding shares of the
Corporation.

46
<PAGE>

INVESTMENT ADVISER

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

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

The Investment Advisory Agreement between Brown Brothers Harriman & Co. and the
Portfolio is dated May 9, 2000 and remains in effect for two years from such
date and thereafter, but only as long as the agreement is specifically approved
at least annually (i) by a vote of the holders of a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the Portfolio or by the
Portfolio's Trustees, and (ii) by a vote of a majority of the Trustees of the
Portfolio who are not parties to the Investment Advisory Agreement or
"interested persons" (as defined in the 1940 Act) of the Portfolio ("Independent
Trustees") cast in person at a meeting called for the purpose of voting on such
approval. The Investment Advisory Agreement was most recently approved by the
Independent Trustees on May 9, 2000. The Investment Advisory Agreement
terminates automatically if assigned and is terminable at any time without
penalty by a vote of a majority of the Trustees of the Portfolio, or by a vote
of the holders of a "majority of the outstanding voting securities" (as defined
in the 1940 Act) of the Portfolio on 60 days' written notice to Brown Brothers
Harriman & Co. and by Brown Brothers Harriman & Co. on 90 days' written notice
to the Portfolio. (See "Additional Information".)

The investment advisory fee paid to the Investment Adviser is calculated daily
and paid monthly at an annual rate equal to 0.35% of the Portfolio's average
daily net assets.

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

Pursuant to a license agreement between the Corporation and Brown Brothers
Harriman & Co. dated September 5, 1990, as amended as of December 15, 1993, the
Corporation may continue to use in its name 59 Wall Street, the current and
historic address of Brown Brothers Harriman & Co. The agreement may be
terminated by Brown Brothers Harriman & Co. at any time upon written notice to
the Corporation upon the 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.

47
<PAGE>
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. Pursuant to a
license agreement between the Portfolio and Brown Brothers Harriman & Co. dated
May 9, 2000, the Portfolio may continue to use in its name BBH. The agreement
may be terminated by Brown Brothers Harriman & Co. at any time upon written
notice to the Portfolio upon the expiration or earlier termination of any
investment advisory agreement between the Portfolio and Brown Brothers Harriman
& Co. Termination of the agreement would require the Portfolio to change its
name to eliminate all reference to BBH.

ADMINISTRATOR

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

Brown Brothers Harriman & Co. acts as Administrator for the Corporation and
Brown Brothers Harriman Trust Company LLC acts as Administrator of the
Portfolio. Brown Brothers Harriman Trust Company LLC is a wholly-owned
subsidiary of Brown Brothers Harriman & Co. In its capacity as Administrator of
the Corporation, Brown Brothers Harriman & Co. administers all aspects of the
Corporation's operations subject to the supervision of the Corporation's
Directors except as set forth below under "Distributor". In connection with its
responsibilities as Administrator and at its own expense, Brown Brothers
Harriman & Co. (i) provides the Corporation with the services of persons
competent to perform such supervisory, administrative and clerical functions as
are necessary in order to provide effective administration of the Corporation,
including the maintenance of certain books and records; (ii) oversees the
performance of administrative and professional services to the Corporation by
others, including the Fund's Custodian, Transfer and Dividend Disbursing Agent;
(iii) provides the Corporation with adequate office space and communications and
other facilities; and (iv) prepares and/or arranges for the preparation, but
does not pay for, the periodic updating of the Corporation's registration
statement and the Fund's prospectus, the printing of such documents for the
purpose of filings with the SEC and state securities administrators, and the
preparation of tax returns for the Fund and reports to the Fund's shareholders
and the SEC.

Brown Brothers Harriman Trust Company LLC in its capacity as Administrator of
the Portfolio, administers all aspects of the Portfolio's operations subject to
the supervision of the Portfolio's Trustees except as set forth above under
"Investment Adviser". In connection with its responsibilities as Administrator
for the Portfolio and at its own expense, Brown Brothers Harriman Trust Company
LLC (i) provides the Portfolio with the services of persons competent to perform
such supervisory, administrative and clerical functions as are necessary in
order to provide effective administration of the Portfolio, including the
maintenance of certain books and records, receiving and processing requests for

48
<PAGE>
increases and decreases in the beneficial interests in the Portfolio,
notification to the Investment Adviser of available funds for investment,
reconciliation of account information and balances between the Custodian and the
Investment Adviser, and processing, investigating and responding to investor
inquiries; (ii) oversees the performance of administrative and professional
services to the Portfolio by others, including the Custodian; (iii) provides the
Portfolio with adequate office space and communications and other facilities;
and (iv) prepares and/or arranges for the preparation, but does not pay for, the
periodic updating of the Portfolio's registration statement for filing with the
SEC, and the preparation of tax returns for the Portfolio and reports to
investors and the SEC.

The Administration Agreement between the Corporation and Brown Brothers Harriman
& Co. 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 Portfolio's Investment Advisory Agreement (see "Investment
Adviser"). The Administration Agreement between the Portfolio and Brown Brothers
Harriman Trust Company LLC (dated May 9, 2000) will remain in effect for
successive annual periods but only so long as such agreement is specifically
approved at least annually in the same manner as the Portfolio's Investment
Advisory Agreement (see "Investment Adviser"). The Independent
Directors/Trustees most recently approved the Corporation's and the Portfolio's
Administration Agreement on November 9, 1999 and May 9, 2000, respectively. The
agreement will terminate automatically if assigned by either party thereto and
is terminable at any time without penalty by a vote of a majority of the
Directors of the Corporation or the Trustees of the Portfolio or by a vote of
the holders of a "majority of the outstanding voting securities" (as defined in
the 1940 Act) of the Corporation or the Portfolio, as the case may be. (See
"Additional Information"). The Administration Agreement is terminable by the
Directors of the Corporation or shareholders of the Corporation on 60 days'
written notice to Brown Brothers Harriman & Co. and by Brown Brothers Harriman &
Co. on 90 days' written notice to the Corporation. The Portfolio's
Administration Agreement is terminable by the Trustees of the Portfolio or by
the Portfolio's corresponding Fund and other investors in the Portfolio on 60
days' written notice to Brown Brothers Harriman Trust Company LLC and by Brown
Brothers Harriman Trust Company LLC on 90 days' written notice to the Portfolio.

The administrative fee payable to Brown Brothers Harriman & Co. from the Fund is
calculated daily and payable monthly at an annual rate equal to 0.075% of the
Fund's average daily net assets. The administrative fee payable to Brown
Brothers Harriman Trust Company LLC from the Portfolio is calculated and payable
monthly at an annual rate equal to 0.035% of the Portfolio's average daily net
assets.

49
<PAGE>
Administrators' subadministrative duties may include providing equipment and
clerical personnel necessary for maintaining the organization of the
Corporation, participation in the preparation of documents required for
compliance by the Corporation with applicable laws and regulations, preparation
of certain documents in connection with meetings of Directors and shareholders
of the Corporation, and other functions that would otherwise be performed by the
Administrator as set forth above. For performing such subadministrative
services, 59 Wall Street Administrators receives such compensation as is from
time to time agreed upon, but not in excess of the amount paid to the
Administrator from the Fund.

Pursuant to a Subadministrative Services Agreement with Brown Brothers Harriman
Trust Company LLC, 59 Wall Street Administrators performs such subadministrative
duties for the Portfolio as are from time to time agreed upon by the parties. 59
Wall Street Administrators' subadministrative duties may include providing
equipment and clerical personnel necessary for maintaining the organization of
the Portfolio, participation in the preparation of documents required for
compliance by the Portfolio with applicable laws and regulations, preparation of
certain documents in connection with meetings of Trustees of and investors in
the Portfolio, and other functions that would otherwise be performed by the
Administrator of the Portfolio as set forth above. For performing such
subadministrative services, 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 Portfolio.

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

59 Wall Street Distributors acts as exclusive Distributor of shares of the Fund.
Its office is located at 21 Milk Street, Boston, Massachusetts 02109. 59 Wall
Street Distributors is a wholly-owned subsidiary of SFG. SFG and its affiliates
currently provide administration and distribution services for other registered
investment companies. The Corporation pays for the preparation, printing and
filing of copies of the Corporation's registration statements and the Fund's
prospectus as required under federal and state securities laws. 59 Wall Street
Distributors holds itself available to receive purchase orders for Fund shares.
The Distribution Agreement (dated September 5, 1990, as amended and restated
February 12, 1991) between the Corporation and 59 Wall Street Distributors
remains in effect for two years from the date of its execution and thereafter,
but only so long as the continuance of such agreement is specifically approved
at least annually in conformity with the requirements of the 1940 Act. The
Distribution Agreement was most recently approved by the Independent Directors
of the Corporation on February 8, 2000. 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.

50
<PAGE>
SHAREHOLDER SERVICING AGENT
-----------------------------------------------------------------
The Corporation has entered into a shareholder servicing agreement with Brown
Brothers Harriman & Co. pursuant to which Brown Brothers Harriman & Co., as
agent for the Corporation with respect to the Fund, among other things: answers
inquiries from shareholders of and prospective investors in the Fund regarding
account status and history, the manner in which purchases and redemptions of
Fund shares may be effected and certain other matters pertaining to the Fund;
assists shareholders of and prospective investors in the Fund in designating and
changing dividend options, account designations and addresses; and provides such
other related services as the Corporation or a shareholder of or prospective
investor in the Fund may reasonably request. For these services, Brown Brothers
Harriman & Co. receives from the Fund an annual fee, computed daily and payable
monthly, equal to 0.25% of the Fund's average daily net assets represented by
shares owned during the period for which payment was being made by shareholders
who did not hold their account with an eligible institution.

FINANCIAL INTERMEDIARIES
-----------------------------------------------------------------
From time to time, the Fund's Shareholder Servicing Agent enters into contracts
with banks, brokers and other financial intermediaries ("Financial
Intermediaries") pursuant to which a customer of the Financial Intermediary may
place purchase orders for Fund shares through that Financial Intermediary which
holds such shares in its name on behalf of that customer. Pursuant to such
contract, each Financial Intermediary as agent with respect to shareholders of
and prospective investors in the Fund who are customers of that Financial
Intermediary, among other things: provides necessary personnel and facilities to
establish and maintain certain shareholder accounts and records enabling it to
hold, as agent, its customer's shares in its name or its nominee name on the
shareholder records of the Corporation; assists in processing purchase and
redemption transactions; arranges for the wiring of funds; transmits and
receives funds in connection with customer orders to purchase or redeem shares
of the Fund; provides periodic statements showing a customer's account balance
and, to the extent practicable, integrates such information with information
concerning other customer transactions otherwise effected with or through it;
furnishes, either separately or on an integrated basis with other reports sent
to a customer, monthly and annual statements and confirmations of all purchases
and redemptions of Fund shares in a customer's account; transmits proxy
statements, annual reports, updated prospectuses and other communications from
the Corporation to its customers; and receives, tabulates and transmits to the
Corporation proxies executed by its customers with respect to meetings of
shareholders of the Fund. For these services, 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.

51
<PAGE>

ELIGIBLE INSTITUTIONS
-----------------------------------------------------------------
The Corporation enters into eligible institution agreements with banks, brokers
and other financial institutions pursuant to which each financial institution,
as agent for the Corporation with respect to shareholders of and prospective
investors in the Fund who are customers with that financial institution, among
other things: provides necessary personnel and facilities to establish and
maintain certain shareholder accounts and records enabling it to hold, as agent,
its customer's shares in its name or its nominee name on the shareholder records
of the Corporation; assists in processing purchase and redemption transactions;
arranges for the wiring of funds; transmits and receives funds in connection
with customer orders to purchase or redeem shares of the Fund; provides periodic
statements showing a customer's account balance and, to the extent practicable,
integrates such information with information concerning other customer
transactions otherwise effected with or through it; furnishes, either separately
or on an integrated basis with other reports sent to a customer, monthly and
annual statements and confirmations of all purchases and redemptions of Fund
shares in a customer's account; transmits proxy statements, annual reports,
updated prospectuses and other communications from the Corporation to its
customers; and receives, tabulates and transmits to the Corporation proxies
executed by its customers with respect to meetings of shareholders of the Fund.
For these services, each financial institution receives from the Fund an annual
fee, computed daily and payable monthly, equal to 0.25% of the Fund's average
daily net assets represented by shares owned during the period for which payment
was being made by customers for whom the financial institution was the holder or
agent of record.

EXPENSE PAYMENT AGREEMENT
-----------------------------------------------------------------
Under an expense payment agreement dated May 9, 2000, 59 Wall Street
Administrators pays the Fund's expenses (see "Expense Table" in the Prospectus),
other than fees paid to Brown Brothers Harriman & Co. under the Corporation's
Administration Agreement and other than expenses relating to the organization of
the Fund. In return, 59 Wall Street Administrators receives a fee from the Fund
such that after such payment the aggregate expenses of the Fund do not exceed an
agreed upon annual rate, currently 0.75% of the average daily net assets of the
Fund. Such fees are computed daily and paid monthly. The expense payment
agreement will terminate on November 1, 2005. If there had been no expense
payment agreement, the Directors of the Corporation estimate that, at the Fund's
current level, the total operating expenses of the Fund may increase to
approximately 1.10% of the average annual net assets of the Fund. The expenses
of the Fund paid by 59 Wall Street Administrators under the agreement include
the shareholder servicing/eligible institution fees, the compensation of the
Directors of the Corporation; governmental fees; interest charges; taxes;
membership dues in the Investment Company Institute allocable to the Fund; fees
and expenses of independent auditors, of legal counsel and of any transfer
agent, custodian, registrar or dividend disbursing agent of the Fund; insurance
premiums; expenses of calculating the net asset value of shares of the Fund;
expenses of preparing, printing and mailing prospectuses, reports, notices,

52
<PAGE>
proxy statements and reports to shareholders and to governmental officers and
commissions; expenses of shareholder meetings; and expenses relating to the
issuance, registration and qualification of shares of the Fund.

Under an expense payment agreement dated May 9, 2000, Brown Brothers Harriman
Trust Company LLC pays the expenses of the Portfolio, other than fees paid to
Brown Brothers Harriman Trust Company LLC under the Portfolio's Administration
Agreement and other than expenses relating to the organization of the Portfolio.
In return, Brown Brothers Harriman Trust Company LLC receives a fee from the
Portfolio such that after such payment the aggregate expenses of the Portfolio
do not exceed an agreed upon annual rate, currently 0.50% of the average daily
net assets of the Portfolio. Such fees are computed daily and paid monthly.

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
-------------------------------------------------------------------
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts 02109, is
Custodian for the Fund and the Portfolio. As Custodian for the Fund, it is
responsible for holding the Fund's assets (i.e., cash and the Fund's interest in
the Portfolio) pursuant to a custodian agreement with the Corporation. Cash is
held for the Fund in demand deposit accounts at the Custodian. Subject to the
supervision of the Administrator of the Corporation, the Custodian maintains the
accounting records for the Fund and each day computes the net asset value per
share of the Fund.

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

Forum Shareholder Services, LLC, Two Portland Square, Portland, ME 04101 is the
Transfer and Dividend Disbursing Agent for the Fund. As Transfer and Dividend
Disbursing Agent it is responsible for maintaining the books and records
detailing the ownership of the Fund's shares.

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

53
<PAGE>

including securities that may be purchased or held by the Portfolio. However,
the codes of ethics contain provisions and requirements designed to identify and
address certain conflicts of interest between personal investment activities and
the interests of the Portfolio. Of course, there can be no assurance that the
codes of ethics will be effective in identifying and addressing all conflicts of
interest relating to personal securities transactions. The code of ethics of the
Corporation, the Portfolio, the Adviser and the Distributor are on file with and
are available from the SEC (See "Additional Information" below).

NET ASSET VALUE; REDEMPTION IN KIND
-------------------------------------------------------------------
The net asset value of the Fund's shares is determined each day the New York
Stock Exchange is open for regular trading. (As of the date of this Statement of
Additional Information, such Exchange is open every weekday except for the
following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas.) The determination of net asset value per share is made once
during each such day as of the close of regular trading on such Exchange by
subtracting from the value of the Fund's total assets the amount of its
liabilities, and dividing the difference by the number of shares of the Fund
outstanding at the time the determination is made.

The value of the Portfolio's net assets (i.e., the value of its securities and
other assets less its liabilities, including expenses payable or accrued) is
determined at the same time and on the same days as the net asset value per
share of the Fund is determined. The value of the Fund's investment in the
Portfolio is determined by multiplying the value of the Portfolio's net assets
by the percentage, effective for that day, which represents the Fund's share of
the aggregate beneficial interests in the Portfolio.

The value of investments listed on a securities exchange is based on the last
sale prices as of the close of regular trading of the New York Stock Exchange
(which is currently 4:00 P.M., New York time) or, in the absence of recorded
sales, at the readily available closing bid price on such Exchange. Unlisted
securities are valued at the quoted bid price in the over-the-counter market.
The value of each security for which readily available market quotations exist
is based on a decision as to the broadest and most representative market for
such security.

Bonds and other fixed income securities (other than short-term obligations but
including listed issues) are valued on the basis of valuations furnished by a
pricing service, use of which has been approved by the Board of Trustees. In
making such valuations, the pricing service utilizes both dealer-supplied
valuations and electronic data processing techniques which take into account
appropriate factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading

54
<PAGE>
characteristics and other market data, without exclusive reliance upon quoted
prices or exchange or over-the-counter prices.

Securities or other assets for which market quotations are not readily available
are valued at fair value in accordance with procedures established by and under
the general supervision and responsibility of the Portfolio's Trustees.
Short-term investments which mature in 60 days or less are valued at amortized
cost if their original maturity was 60 days or less, or by amortizing their
value on the 61st day prior to maturity, if their original maturity when
acquired for the Portfolio was more than 60 days, unless this is determined not
to represent fair value by the Trustees of the Portfolio.

Trading in securities on most foreign exchanges and over-the-counter markets is
normally completed before the close of the New York Stock Exchange and may also
take place on days the New York Stock Exchange is closed. If events materially
affecting the value of foreign securities occur between the time when the
exchange on which they are traded closes and the time when the Portfolio's net
asset value is calculated, such securities would be valued at fair value in
accordance with procedures established by and under the general supervision of
the Portfolio's Trustees.

Subject to the Corporation's compliance with applicable regulations, the
Corporation has reserved the right to pay the redemption price of shares of the
Fund, either totally or partially, by a distribution in-kind of portfolio
securities (instead of cash). The securities so distributed would be valued at
the same amount as that assigned to them in calculating the net asset value for
the shares being sold. If a shareholder received a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash. The Corporation has elected, however, to be governed by Rule 18f-1
under the 1940 Act, as a result of which the Corporation is obligated with
respect to any one investor during any 90 day period to redeem shares of the
Fund solely in cash up to the lesser of $250,000 or 1% of the Fund's net assets
at the beginning of such 90 day period.

COMPUTATION OF PERFORMANCE
-------------------------------------------------------------------
The average annual total rate of return of the Fund is calculated for any period
by (a) dividing (i) the sum of the aggregate net asset value per share on the
last day of the period of shares purchased with a $1,000 payment on the first
day of the period and the aggregate net asset value per share on the last day of
the period of shares purchasable with dividends and capital gains distributions
declared during such period with respect to shares purchased on the first day of
such period and with respect to shares purchased with such dividends and capital
gains distributions, by (ii) $1,000, (b) raising the quotient to a power equal
to 1 divided by the number of years in the period, and (c) subtracting 1 from
the result.

The total rate of return of the Fund for any specified period is calculated by
(a) dividing (i) the sum of the aggregate net asset value per share on the last

55
<PAGE>
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.

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

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

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

The Fund's performance may be used from time to time in shareholder reports or
other communications to shareholders or prospective investors. Performance
figures are based on historical earnings and are not intended to indicate future
performance. Performance information may include the Fund's investment results
and/or comparisons of its investment results to various unmanaged indexes (such
as Merrill Lynch High Yield Index Master I) 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.

56
<PAGE>
Period and average annualized total rates of return may be provided in such
communications. The total rate of return refers to the change in the value of an
investment in the Fund over a stated period based on any change in net asset
value per share and including the value of any shares purchasable with any
dividends or capital gains distributions during such period. Period total rates
of return may be annualized. An annualized total rate of return is a compounded
total rate of return which assumes that the period total rate of return is
generated over a one year period, and that all dividends and capital gains
distributions are reinvested. An annualized total rate of return is slightly
higher than a period total rate of return if the period is shorter than one
year, because of the assumed reinvestment.

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

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

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

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

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

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

FEDERAL TAXES
-------------------------------------------------------------------
Each year, the Corporation intends to continue to qualify the Fund and elect
that the Fund be treated as a separate "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, the Fund is
not subject to federal income taxes on its net income and realized net long-term
capital gains that are distributed to its shareholders. A 4% non-deductible

57
<PAGE>
excise tax is imposed on the Fund to the extent that certain distribution
requirements for the Fund for each calendar year are not met. The Corporation
intends to meet such requirements. The Portfolio is also not required to pay any
federal income or excise taxes. Under Subchapter M of the Code the Fund is not
subject to federal income taxes on amounts distributed to shareholders.

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 represented by investments in the securities of any one issuer (other
than U.S. Government securities and securities of other investment companies).
Foreign currency gains that are not directly related to the Portfolio's business
of investing in stock or securities is included in the income that counts toward
the 30% gross income requirement described above but may be excluded by Treasury
Regulations from income that counts toward the 90% of gross income requirement
described above. In addition, in order not to be subject to federal income tax,
at least 90% of the Fund's net investment income and net short-term capital
gains earned in each year must be distributed to the Fund's shareholders. Under
the Code, gains or losses attributable to foreign currency contracts, or to
fluctuations in exchange rates between the time the Portfolio accrues income or
receivables or expenses or other liabilities denominated in a foreign currency
and the time it actually collects such income or pays such liabilities, are
treated as ordinary income or ordinary loss. Similarly, the Fund's share of
gains or losses on the disposition of debt securities held by the Portfolio, if
any, denominated in foreign currency, to the extent attributable to fluctuations
in exchange rates between the acquisition and disposition dates are also treated
as ordinary income or loss. 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

58
<PAGE>
cases where a put has been acquired or a call has been written thereon. Other
gains or losses on the sale of securities are treated as short-term capital
gains or losses. Gains and losses on the sale, lapse or other termination of
options on securities are generally treated as gains and losses from the sale of
securities. If an option written for the Portfolio lapses or is terminated
through a closing transaction, such as a repurchase of the option from its
holder, the Portfolio may realize a short-term capital gain or loss, depending
on whether the premium income is greater or less than the amount paid in the
closing transaction. If securities are sold pursuant to the exercise of a call
option written for them, the premium received would be added to the sale price
of the securities delivered in determining the amount of gain or loss on the
sale. The requirement that less than 30% of the Fund's gross income be derived
from gains from the sale of securities held for less than three months may limit
the Portfolio's ability to write options and engage in transactions involving
stock index futures.

Certain options contracts held for the Portfolio at the end of each fiscal year
are required to be "marked to market" for federal income tax purposes; that is,
treated as having been sold at market value. Sixty percent of any gain or loss
recognized on these deemed sales and on actual dispositions are treated as
long-term capital gain or loss, and the remainder are treated as short-term
capital gain or loss regardless of how long such options were held. The
Portfolio may be required to defer the recognition of losses on stock or
securities to the extent of any unrecognized gain on offsetting positions held
for it.

If shares are purchased by the Portfolio in certain foreign investment entities,
referred to as "passive foreign investment companies", the Fund may be subject
to U.S. federal income tax, and an additional charge in the nature of interest,
on the Fund's portion of any "excess distribution" from such company or gain
from the disposition of such shares, even if the distribution or gain is paid by
the Fund as a dividend to its shareholders. If the Fund were able and elected to
treat a passive foreign investment company as a "qualified electing fund", in
lieu of the treatment described above, the Fund would be required each year to
include in income, and distribute to shareholders, in accordance with the
distribution requirements set forth above, the Fund's pro rata share of the
ordinary earnings and net capital gains of the company, whether or not
distributed to the Fund.

Return of Capital. Any dividend or capital gains distribution has the effect of
reducing the net asset value of Fund shares held by a shareholder by the same
amount as the dividend or capital gains distribution. If the net asset value of
shares is reduced below a shareholder's cost as a result of a dividend or
capital gains distribution by the Fund, such dividend or capital gains
distribution would be taxable even though it represents a return of invested
capital.

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<PAGE>
Redemption of Shares. Any gain or loss realized on the redemption of Fund shares
by a shareholder who is not a dealer in securities would be treated as long-term
capital gain or loss if the shares have been held for more than one year, and
otherwise as short-term capital gain or loss. However, any loss realized by a
shareholder upon the redemption of Fund shares held one year or less is treated
as a long-term capital loss to the extent of any long-term capital gains
distributions received by the shareholder with respect to such shares.
Additionally, any loss realized on a redemption or exchange of Fund shares is
disallowed to the extent the shares disposed of are replaced within a period of
61 days beginning 30 days before such disposition, such as pursuant to
reinvestment of a dividend or capital gains distribution in Fund shares.

Foreign Taxes. The Fund may be subject to foreign withholding taxes and if more
than 50% of the value of the Fund's share of the Portfolio's total assets at the
close of any fiscal year consists of stock or securities of foreign
corporations, at the election of the Corporation any such foreign income taxes
paid by the Fund may be treated as paid directly by its shareholders. The
Corporation makes such an election only if it deems it to be in the best
interest of the Fund's shareholders and notifies shareholders in writing each
year if it makes the election and of the amount of foreign income taxes, if any,
to be treated as paid by the shareholders. If the Corporation elects to treat
foreign income taxes paid from the Fund as paid directly by the Fund's
shareholders, the Fund's shareholders would be required to include in income
such shareholder's proportionate share of the amount of foreign income taxes
paid by the Fund and would be entitled to claim either a credit or deduction in
such amount. (No deduction is permitted in computing alternative minimum tax
liability). Shareholders who choose to utilize a credit (rather than a
deduction) for foreign taxes are subject to the limitation that the credit may
not exceed the shareholder's U.S. tax (determined without regard to the
availability of the credit) attributable to that shareholder's total foreign
source taxable income. For this purpose, the portion of dividends and capital
gains distributions paid from the Fund from its foreign source income is treated
as foreign source income. The Fund's gains and losses from the sale of
securities are generally treated as derived from U.S. sources, however, and
certain foreign currency gains and losses likewise are treated as derived from
U.S. sources. The limitation of the foreign tax credit is applied separately to
foreign source "passive income", such as the portion of dividends received from
the Fund which qualifies as foreign source income. In addition, the foreign tax
credit is allowed to offset only 90% of the alternative minimum tax imposed on
corporations and individuals. Because of these limitations, a shareholder may be
unable to claim a credit for the full amount of such shareholder's proportionate
share of the foreign income taxes paid from the Fund.

Certain entities, including corporations formed as part of corporate pension or
profit-sharing plans and certain charitable and other organizations described in
Section 501 (c) of the Internal Revenue Code, as amended, that are generally
exempt from federal income taxes may not receive any benefit from the election
by the Corporation to "pass through" foreign income taxes to the Fund's
shareholders. In certain circumstances foreign taxes imposed with respect to the
Fund's income may not be treated as income taxes imposed on the Fund. Any such
taxes would not be included in the Fund's income, would not be eligible to be
"passed through" to Fund shareholders, and would not be eligible to be claimed
as a foreign tax credit or deduction by Fund shareholders. In particular, in
certain circumstances it may not be clear whether certain amounts of taxes
deducted from gross dividends paid to the Fund would, for U.S. federal income
tax purposes, be treated as imposed on the issuing corporation rather than the
Fund.

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

Other Information. Annual notification as to the tax status of capital gains
distributions, if any, is provided to shareholders shortly after October 31, the
end of the Fund's fiscal year. Additional tax information is mailed to
shareholders in January.

Under U.S. Treasury regulations, the Corporation and each Eligible Institution
are required to withhold and remit to the U.S. Treasury a portion (31%) of
dividends and capital gains distributions on the accounts of those shareholders
who fail to provide a correct taxpayer identification number (Social Security
Number for individuals) or to make required certifications, or who have been
notified by the Internal Revenue Service that they are subject to such
withholdings. Prospective investors should submit an IRS Form W-9 to avoid such
withholding.

This tax discussion is based on the tax laws and regulations in effect on the
date of this Prospectus, however such laws and regulations are subject to
change. Shareholders and prospective investors are urged to consult their tax
advisors regarding specific questions relevant to their particular
circumstances.

DESCRIPTION OF SHARES
-------------------------------------------------------------------
The Corporation is an open-end management investment company organized as a
Maryland corporation on July 16, 1990. Its offices are located at 21 Milk
Street, Boston, Massachusetts 02109; its telephone number is (617) 423-0800. The
Articles of Incorporation currently permit the Corporation to issue
2,500,000,000 shares of common stock, par value $0.001 per share, of which
25,000,000 shares have been classified as shares of The 59 Wall Street High
Yield Fixed Income Fund. The Board of Directors also has the power to designate
one or more series of shares of common stock and to classify and reclassify any
unissued shares with respect to such series. Currently there are seven such
series in addition to the Fund.

Shareholders of the Fund are entitled to a full vote for each full share held
and to a fractional vote for fractional shares. Shareholders in the Corporation
do not have cumulative voting rights, and shareholders owning more than 50% of
the outstanding shares of the Corporation may elect all of the Directors of the
Corporation if they choose to do so and in such event the other shareholders in
the Corporation would not be able to elect any Director. The Corporation is not
required and has no current intention to hold meetings of shareholders annually
but the Corporation will hold special meetings of shareholders when in the
judgment of the Corporation's Directors it is necessary or desirable to submit
matters for a shareholder vote or as may be required by the 1940 Act or as my be
permitted by the Articles of Incorporation or By-laws. Shareholders have under

61
<PAGE>
certain circumstances (e.g., upon application and submission of certain
specified documents to the Directors by a specified number of shareholders) the
right to communicate with other shareholders in connection with requesting a
meeting of shareholders for the purpose of removing one or more Directors.
Shareholders also have the right to remove one or more Directors without a
meeting by a declaration in writing by a specified number of shareholders.
Shares have no preemptive or conversion rights. The rights of redemption are
described in the Prospectus. Shares are fully paid and non-assessable by the
Corporation.

Stock certificates are not issued by the Corporation.

The By-laws of the Corporation provide that the presence in person or by proxy
of the holders of record of one third of the shares of the Fund outstanding and
entitled to vote thereat shall constitute a quorum at all meetings of
shareholders of the Fund, except as otherwise required by applicable law. The
By-laws further provide that all questions shall be decided by a majority of the
votes cast at any such meeting at which a quorum is present, except as otherwise
required by applicable law.

The Corporation's Articles of Incorporation provide that, at any meeting of
shareholders of the Fund, each Eligible Institution or Financial Intermediary,
may vote any shares as to which that Eligible Institution or Financial
Intermediary 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 or Financial Intermediary is the
agent of record. Any shares so voted by an Eligible Institution or Financial
Intermediary are deemed represented at the meeting for purposes of quorum
requirements. The Portfolio is organized as a trust under the laws of the State
of New York. The Portfolio's Declaration of Trust provides that the Fund and
other entities investing in the Portfolio (e.g., other investment companies,
insurance company separate accounts and common and commingled trust funds) are
liable for all obligations of the Portfolio. However, the risk of the Fund
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Portfolio
itself was unable to meet its obligations. Accordingly, the Directors of the
Corporation believe that neither the Fund nor its shareholders will be adversely
affected by reason of the investment of all of the Fund's assets in the
Portfolio. Each investor in the Portfolio, including the Fund, may add to or
reduce its investment in the Portfolio on each day the New York Stock Exchange
is open for regular trading. At 4:00 P.M., New York time on each such business
day, the value of each investor's beneficial interest in the Portfolio is
determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents that investor's share of
the aggregate beneficial interests in the Portfolio. Any additions or
withdrawals, which are to be effected on that day, are then effected. The
investor's percentage of the aggregate beneficial interests in the Portfolio is
then recomputed as the percentage equal to the fraction (i) the numerator of
which is the value of such investor's investment in the Portfolio as of 4:00
P.M., New York time on such day plus or minus, as the case may be, the amount of
any additions to or withdrawals from the investor's investment in the Portfolio
effected on such day, and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of 4:00 P.M., New York time on such day plus or
minus, as the case may be, the amount of the net additions to or withdrawals
from the aggregate investments in the Portfolio by all investors in the
Portfolio. The percentage so determined is then applied to determine the value
of the investor's interest in the Portfolio as of 4:00 P.M., New York time on
the following business day of the Portfolio.

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<PAGE>
Whenever the Corporation is requested to vote on a matter pertaining to the
Portfolio, the Corporation will vote its shares without a meeting of
shareholders of the Fund if the proposal is one, if which made with respect to
the Fund, would not require the vote of shareholders of the Fund, as long as
such action is permissible under applicable statutory and regulatory
requirements. For all other matters requiring a vote, the Corporation will hold
a meeting of shareholders of the Fund and, at the meeting of investors in the
Portfolio, the Corporation will cast all of its votes in the same proportion as
the votes of the Fund's shareholders even if all Fund shareholders did not vote.
Even if the Corporation votes all its shares at the Portfolio meeting, other
investors with a greater pro rata ownership in the Portfolio could have
effective voting control of the operations of the Portfolio.

The Articles of Incorporation and the By-Laws of the Corporation provide that
the Corporation indemnify the Directors and officers of the Corporation to the
full extent permitted by the Maryland Corporation Law, which permits
indemnification of such persons against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Corporation. However, nothing in the Articles of Incorporation
or the By-Laws of the Corporation protects or indemnifies a Director or officer
of the Corporation against any liability to the Corporation or its shareholders
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.

Interests in the Portfolio have no preference, preemptive, conversion or similar
rights, and are fully paid and non-assessable. The Portfolio is not required to
hold annual meetings of investors, but will hold special meetings of investors
when, in the judgment of its Trustees, it is necessary or desirable to submit
matters for an investor vote. Each investor is entitled to a vote in proportion
to the share of its investment in the Portfolio.

PORTFOLIO BROKERAGE TRANSACTIONS
-------------------------------------------------------------------
The securities in which the Portfolio invests are traded primarily in the
over-the-counter markets on a net basis and do not normally involve either
brokerage commissions or transfer taxes. Where possible transactions on behalf
of the Portfolio are entered directly with the issuer or from an underwriter or
market maker for the securities involved. Purchases from underwriters of
securities may include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers may include a
spread between the bid and asked price. The policy of the Portfolio regarding
purchases and sales of securities is that primary consideration is given to
obtaining the most favorable prices and efficient executions of transactions. In
seeking to implement the Portfolio's policies, the Investment Adviser effects
transactions with those brokers and dealers who the Investment Adviser believes
provide the most favorable prices and are capable of providing efficient
executions. While reasonably competitive spreads or commissions are sought for
the Portfolio, it will not necessarily be paying the lowest spread or commission
available. If the Investment Adviser believes such prices and executions are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Portfolio or Investment Adviser. Such
services may include, but are not limited to, any one or more of the following:
information as to the availability of securities for purchase or sale;
statistical or factual information or opinions pertaining to investment; wire
services; and appraisals or evaluations of portfolio securities. A 100% turnover
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.

63
<PAGE>
On those occasions when Brown Brothers Harriman & Co. deems the purchase or sale
of a security to be in the best interests of the Portfolio as well as other
customers, Brown Brothers Harriman & Co. to the extent permitted by applicable
laws and regulations, may, but is not obligated to, aggregate the securities to
be sold or purchased for the Portfolio with those to be sold or purchased for
other customers in order to obtain best execution, including lower brokerage
commissions, if appropriate. In such event, allocation of the securities so
purchased or sold as well as any expenses incurred in the transaction are made
by Brown Brothers Harriman & Co. in the manner it considers to be most equitable
and consistent with its fiduciary obligations to its customers, including the
Portfolio. In some instances, this procedure might adversely affect the
Portfolio.

Over-the-counter purchases and sales are transacted directly with principal
market makers, except in those circumstances in which, in the judgment of the
Investment Adviser, better prices and execution of orders can otherwise be
obtained. If the Portfolio effects a closing transaction with respect to a
futures or option contract, such transaction normally would be executed by the
same broker-dealer who executed the opening transaction. The writing of options
by the Portfolio may be subject to limitations established by each of the
exchanges governing the maximum number of options in each class which may be
written by a single investor or group of investors acting in concert, regardless
of whether the options are written on the same or different exchanges or are
held or written in one or more accounts or through one or more brokers. The
number of options which the Portfolio may write may be affected by options
written by the Investment Adviser for other investment advisory clients. An
exchange may order the liquidation of positions found to be in excess of these
limits, and it may impose certain other sanctions.

ADDITIONAL INFORMATION
------------------------------------------------------------

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

64
<PAGE>

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

Other mutual funds or institutional investors may invest in the Portfolio on the
same terms and conditions as the Fund. However, these other investors may have
different sales commissions and other operating expenses which may generate
different aggregate performance results. Information concerning other investors
in the Portfolio is available from Brown Brothers Harriman & Co.

The Corporation may withdraw the Fund's investment in the Portfolio as a
result of certain changes in the Portfolio's investment objective, policies or
restrictions or if the Board of Directors of the Corporation determines that it
is otherwise in the best interests of the Fund to do so. Upon any such
withdrawal, the Board of Directors of the Corporation would consider what action
might be taken, including the investment of all of the assets of the Fund in
another pooled investment entity or the retaining of an investment adviser to
manage the Fund's assets in accordance with the Fund's investment policies. In
the event the Directors of the Corporation were unable to accomplish either, the
Directors will determine the best course of action.

With respect to the securities offered by the Prospectus, this Statement of
Additional Information and the Prospectus do not contain all the information
included in the Registration Statement filed with the SEC under the Securities
Act of 1933. Pursuant to the rules and regulations of the SEC, certain portions
have been omitted. The Registration Statement including the exhibits filed
therewith may be examined at the office of the SEC in Washington, D.C. or 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].

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.

<PAGE>
Appendix - Description of Ratings

The Portfolio's investments may range in quality from securities rated in the
lowest category in which the Portfolio is permitted to invest to securities
rated in the highest category (as rated by Moody's, Standard & Poor's, Fitch's,
or, if unrated, determined by the Investment Adviser to be of comparable
quality). The percentage of the Portfolio's assets invested in securities in a
particular rating category will vary. The following terms are generally used to
describe the credit quality of fixed income securities:

Investment Grade Debt Securities are those rated in one of the four highest
rating categories or, if unrated, deemed comparable by the Investment Adviser.

Below Investment Grade, High Yield Securities ("Junk Bonds") are those rated
lower than Baa by Moody's or BBB by Standard & Poor's and comparable securities.
They are deemed to be predominately speculative with respect to the issuer's
ability to repay principal and interest.

Moody's Investors Service, Inc. - Corporate Bond Ratings

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present that make the
long-term risks appear somewhat larger than with Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present that
suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

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Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classified from Aa through B in its corporate bond rating system. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of its generic rating category.

Corporate Short-Term Debt Ratings

Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations which have an original maturity not exceeding
one year. Obligations relying upon support mechanisms such as letters of credit
and bonds of indemnity are excluded unless explicitly rated.

Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:

PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structure with moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.

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<PAGE>
PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

PRIME-3: Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating
categories.

Short-Term Municipal Bond Ratings

There are four rating categories for short-term municipal bonds that define an
investment grade situation, which are listed below. In the case of variable rate
demand obligations (VRDOs), a two- component rating is assigned. The first
element represents an evaluation of the degree of risk associated with scheduled
principal and interest payments, and the other represents an evaluation of the
degree of risk associated with the demand feature. The short-term rating
assigned to the demand feature of VRDOs is designated as VMIG. When either the
long- or short-term aspect of a VRDO is not rated, that piece is designated NR,
e.g., Aaa/NR or NR/VMIG 1. MIG ratings terminate at the retirement of the
obligation while VMIG rating expiration will be a function of each issue's
specific structural or credit features.

MIG 1/VMIG 1: This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.

MIG 2/VMIG 2: This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.

MIG 3/VMIG 3: This designation denotes favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.

MIG 4/VMIG 4: This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.

SG: This designation denotes speculative quality. Debt instruments in this
category lack margins of protection.

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<PAGE>
Corporate Bond Ratings

Standard & Poor's Ratings Services - Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only in small degree.

A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions, or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.

Speculative Grade

Debt rated BB, B, CCC, CC, and C is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal. BB
indicates the least degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB-rating.

CCC: Debt rated CCC has a currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.

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CC: The rating CC is typically applied to debt subordinated to senior debt that
is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt that is
assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is being
paid.

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The D rating will also be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

Provisional ratings: The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit quality
subsequent to completion of the project, makes no comment on the likelihood of,
or the risk of default upon failure of, such completion. The investor should
exercise his own judgment with respect to such likelihood and risk.

r: The "r" is attached to highlight derivative, hybrid, and certain other
obligations that Standard & Poor's believes may experience high volatility or
high variability in expected returns due to non- credit risks. Examples of such
obligations are: securities whose principal or interest return is indexed to
equities, commodities, or currencies; certain swaps and options; and interest
only and principal only mortgage securities.

The absence of an "r" symbol should not be taken as an indication that an
obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Debt obligations of issuers outside the United States and its territories are
rated on the same basis as domestic corporate and municipal issues. The ratings
measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.

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Fitch Investors Service ("Fitch") - Investment Grade

AAA, AA and A - Bonds rated AAA are considered to be investment grade and of the
highest quality. The obligor has an extraordinary ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events. Bonds rated AA are considered to be investment grade and of high
quality. The obligor's ability to pay interest and repay principal, while very
strong, is somewhat less than for AAA rated securities or more subject to
possible change over the term of the issue. Bonds rated A are considered to be
investment grade and of good quality. The obligor's ability to pay interest and
repay principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with higher
ratings.

Commercial Paper Rating Definitions

A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Ratings are graded into several categories, ranging from A for the
highest quality obligations to D for the lowest. These categories are as
follows:

A-1: This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

A-3: Issues carrying this designation have adequate capacity for timely payment.
They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.

B: Issues rated B are regarded as having only speculative capacity for timely
payment.

C: This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless Standard & Poor's believes
that such payments will be made during such grace period.

Fitch - Commercial Paper ratings reflect current appraisal of the degree of
assurance of timely payment. F-1+ issues are regarded as having the strongest
degree of assurance for timely payment. An F-1 rating reflects an assurance of
timely payment only slightly less in degree than an F-1+ rating. The symbol LOC
may follow either category and indicates that a letter of credit issued by a
commercial bank is attached to the commercial paper.

A commercial paper rating is not a recommendation to purchase, sell or hold a
security inasmuch as it does not comment as to market price or suitability for a

<PAGE>
particular investor. The ratings are based on current information furnished to
Standard & Poor's or Fitch by the issuer or obtained from other sources it
considers reliable. Standard & Poor's or Fitch does not perform an audit in
connection with any rating and may, on occasion, rely on unaudited financial
information. The ratings may be changed, suspended, or withdrawn as a result of
changes in or unavailability of such information.

Duff & Phelps Credit Rating Co.

Long-Term Debt and Preferred Stock Ratings

Rating Scale

These ratings represent a summary opinion of the issuer's long-term
fundamental quality. Rating determination is based on qualitative and
quantitative factors which may vary according to the basic economic and
financial characteristics of each industry and each issuer. Important
considerations are vulnerability to economic cycles as well as risks related to
such factors as competition, government action, regulation, technological
obsolescence, demand shifts, cost structure, and management depth and expertise.
The projected viability of the obligor at the trough of the cycle is a critical
determination.

Each rating also takes into account the legal form of the security (e.g., first
mortgage bonds, subordinated debt, preferred stock, etc.). The extent of rating
dispersion among the various classes of securities is determined by several
factors including relative weightings of the different security classes in the
capital structure, the overall credit strength of the issuer, and the nature of
covenant protection. From time to time, Duff & Phelps Credit Rating Co. places
issuers or security classes on Rating Watch. The Rating Watch status results
from a need to notify investors and the issuer that there are conditions present
leading us to re-evaluate the current rating(s).

A listing on Rating Watch, however, does not mean a rating change is
inevitable. The Rating Watch status can either be resolved quickly or over a
longer period of time, depending on the reasons surrounding the placement on
Rating Watch. The "up" designation means a rating may be upgraded; the "down"
designation means a rating may be downgraded, and the "uncertain" designation
means a rating may be raised or lowered.

Ratings of `BBB-' and higher fall within the definition of investment grade
securities, as defined by bank and insurance supervisory authorities. Structured
finance issues, including real estate, asset-backed and mortgage-backed
financings, use this same rating scale. Duff & Phelps Credit Rating claims
paying ability ratings of insurance companies use the same scale with minor
modification in the definitions (see page vii). Thus, an investor can compare
the credit quality of investment alternatives across industries and structural
types. A "Cash Flow Rating" (as noted for specific ratings) addresses the
likelihood that aggregate principal and interest will equal or exceed the rated
amount under appropriate stress conditions.

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Rating Definition

AAA

Highest credit quality. The risk factors are negligible, being only slightly
more than for risk-free U.S. Treasury debt.

AA+
AA
AA-

High credit quality. Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions.

A+
A
A-

Protection factors are average but adequate. However, risk factors are more
variable in periods of greater economic stress.

BBB+
BBB
BBB-

Below-average protection factors but still considered sufficient for prudent
investment. Considerable variability in risk during economic cycles.

BB+
BB
BB-

Below investment grade but deemed likely to meet obligations when due. Present
or prospective financial protection factors fluctuate according to industry
conditions. Overall quality may move up or down frequently within this category.

B+
B
B-

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Below investment grade and possessing risk that obligations will not be met when
due. Financial protection factors will fluctuate widely according to economic
cycles, industry conditions and/or company fortunes. Potential exists for
frequent changes in the rating within this category or into a higher or lower
rating grade.

CCC

Well below investment-grade securities. Considerable uncertainty exists as to
timely payment of principal, interest or preferred dividends. Protection factors
are narrow and risk can be substantial with unfavorable economic/industry
conditions, and/or with unfavorable company developments.

Defaulted debt obligations. Issuer failed to meet scheduled principal and/or
interest payments.

Preferred stock with dividend arrearages.

Credit ratings are based on information obtained from sources believed to be
accurate and reliable and are not a recommendation to buy, sell or hold a
financial obligation. We do not perform an audit in connection with any
information received and may rely on unaudited information. Credit ratings may
be subject to revision, suspension or withdrawal at any time as necessary due to
changes in or unavailability of information or other circumstances.

<PAGE>

-------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
THE 59 WALL STREET BROAD MARKET FIXED INCOME FUND
21 Milk Street, Boston, Massachusetts 02109
-------------------------------------------------------------------

The 59 Wall Street Broad Market Fixed Income Fund (the "Broad Market Fixed
Income Fund" or the "Fund") is a separate series 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 Broad Market
Fixed Income Fund's investment objective is to provide the maximum total return,
consistent with the preservation of capital and prudent investment management.
There can be no assurance that the investment objective of the Fund will be
achieved.

The Corporation seeks to achieve the investment objective of the Fund by
investing all of the Fund's assets in the BBH Broad Market Fixed Income
Portfolio (the "Portfolio"), a open-end investment management company having the
same investment objective as the Fund.

Brown Brothers Harriman & Co. is the investment adviser (the "Investment
Adviser") of the Portfolio. This Statement of Additional Information is not a
prospectus and should be read in conjunction with the Prospectus dated [ ],
2000, a copy of which may be obtained from the Corporation at the address noted
above.
<TABLE>
<CAPTION>

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

Cross-Reference to
Page Page in Prospectus

Investments
Investment Objective and Policies . . . . . . . . . 3 3
Investment Restrictions . . . . . . . . . . . . . . 31
Management
Directors and Officers . . . . . . . . . . . . . . . 34
Investment Adviser . . . . . . . . . . . . . . . . . 39 8
Administrator . . . . . . . . . . . . . . . . . . . 40
Distributor . . . . . . . . . . . . . . . . . . . . 42
Shareholder Servicing Agent,
Financial Intermediaries and Eligible Institutions . . 43
Expense Payment Agreement 44
Custodian, Transfer and Dividend Disbursing Agent 45
Independent Auditors 46
Net Asset Value; Redemption in Kind . . . . . . . . 46 8
Computation of Performance . . . . . . . . . . . . . 48
</TABLE>

The date of this Statement of Additional
Information is [ ],2000.

<PAGE>

Table of Contents

Cross-Reference to
Page Page in Prospectus

Purchases and Redemptions 49 9
Federal Taxes . . . . . . . . . . . . . . . . . . 50 11
Description of Shares . . . . . . . . . . . . . . 53

Portfolio Brokerage Transactions . . . . . . . . . . . . . . . 56
Additional Information . . . . . . . . . . . . . . . 57 12
Appendix - Description of Ratings. . . . . . . . . . . . . . . . 60

</TABLE>

The date of this Statement of Additional
Information is [ ], 2000.

<PAGE>

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

Debt Securities

Corporate Debt Securities

The Portfolio's investment in U.S. dollar or foreign currency-denominated
corporate debt securities of domestic or foreign issuers is limited to corporate
bonds, debentures, notes and other similar corporate debt instruments, including
convertible securities including corporate income-producing securities which
meet the minimum ratings criteria set forth for the Portfolio, or, if unrated,
are in the Adviser's opinion comparable in quality to corporate debt securities
in which the Portfolio may invest.

Debt Securities Rating Criteria

Below investment grade debt securities are those rated "BB" and below by
Standard & Poor's or the equivalent rating of other nationally recognized
securities rating organizations. See the Appendix for a description of rating
categories. An investment grade security is one rated investment grade at the
time of purchase, by either Moody's Investors Service, Inc., Standard & Poor's
Corporation, Fitch IBCA or Duff & Phelps Credit Rating Co. (or, if unrated, a
security that would, in the opinion of the Investment Adviser, be investment
grade if rated by a nationally recognized rating organizatoin). In the event

3
<PAGE>
that a security is downgraded below investment grade, the Investment Adviser
will use his or her expertise and judgement to evaluate when and if to sell the
below investment grade security.

Collaterialized Bond Obligations

Collaterialized Loan Obligations

Convertible Securities

4
<PAGE>

Because of the conversion feature, the price of the convertible security will
normally fluctuate in some proportion to changes in the price of the underlying
asset, and as such is subject to risks relating to the activities of the issuer
and/or general market and economic conditions. The income component of a
convertible security may tend to cushion the security against declines in the
price of the underlying asset. However, the income component of convertible
securities causes fluctuations based upon changes in interest rates and the
credit quality of the issuer. In addition, convertible securities are often
lower-rated securities.

Mortgage-Related and Other Asset-Backed Securities

Mortgage-related securities are interests in pools of residential or commercial
mortgage loans, including first and second mortgage loans made by savings and
loan institutions, mortgage bankers, commercial banks and others. Pools of
mortgage loans are assembled as securities for sale to investors by various
governmental, government-related and private organizations. See "Mortgage
Pass-Through Securities." The Portfolio may also invest in debt securities which
are secured with collateral consisting of mortgage-related securities (see
"Collateralized Mortgage Obligations"), and in other types of mortgage-related
securities.

The rate of prepayments on underlying mortgages will affect the price and
volatility of a mortgage-related security, and may have the effect of shortening

5
<PAGE>
or extending the effective maturity of the security beyond what was anticipated
at the time of purchase. To the extent that unanticipated rates of prepayment on
underlying mortgages increase in the effective maturity of a mortgage-related
security, the volatility of such security can be expected to increase.

6
<PAGE>
Portfolio may buy mortgage-related securities without insurance or guarantees
if, through an examination of the loan experience and practices of the
originator/servicers and poolers, the Adviser determines that the securities
meet the Portfolio's quality standards. Although the market for such securities
is becoming increasingly liquid, securities issued by certain private
organizations may not be readily marketable.

7
<PAGE>
the order A, B, C, Z. The Series A, B, and C Bonds all bear current interest.
Interest on the Series Z Bond is accrued and added to principal and a like
amount is paid as principal on the Series A, B, or C Bond currently being paid
off. When the Series A, B, and C Bonds are paid in full, interest and principal
on the Series Z Bond begins to be paid currently. With some CMOs, the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios.

8
<PAGE>
the yield to maturity on the related CMO residual will also be extremely
sensitive to changes in the level of the index upon which interest rate
adjustments are based. As described below with respect to stripped
mortgage-backed securities, in certain circumstances the Portfolio may fail to
recoup fully its initial investment in a CMO residual.

Stripped Mortgage-Backed Securities

SMBS are derivative multi-class mortgage securities. SMBS may be issued by
agencies or instrumentalities of the U.S. Government, or by private originators
of, or investors in, mortgage loans, including savings and loan associations,
mortgage banks, commercial banks, investment banks and special purpose entities
of the foregoing.

9
<PAGE>
Other Asset-Backed Securities

Consistent with the Portfolio's investment objectives and policies, the Adviser
also may invest in other types of asset-backed securities. An asset-backed
security is typically a trust consisting of consumer or commercial loans.
Similar to a bond, interest and principal is paid, in most cases, on a monthly
basis. Asset-backed securities may be collaterialized by, but not limited to,
credit card loans, automobile loans, home equity loans and manufactured housing
and airplane leases. Asset-backed securities are typically structured into
multiple classes each bearing a different stated maturity. Actual maturity and
average life will depend upon the prepayment experience of the collateral.

U.S. Government Securities

Variable and Floating Rate Instruments

10
<PAGE>
Zero Coupon Bonds

Deferred Interest Bonds

A bond such as a zero-coupon bond that does not pay interest until a later date.
Prices for deferred interest bonds are less stable than for a current coupon
bond.

PIK (Payment-In-Kind) Securities

Bonds or preferred stock whose dividends are in the form of additional bonds or
preferred stock.

Municipal Obligations

The mortgage derivatives that the Portfolio may invest in include interests in
collateralized mortgage obligations and stripped mortgage-backed securities.

11
<PAGE>
Event-linked bonds

Short-Term Investments

12
<PAGE>
higher by Moody's or Standard & Poor's; the issuer's parent corporation, if any,
must have outstanding commercial paper rated Prime-1 by Moody's or A-1 by
Standard & Poor's; or, if no such ratings are available, the instrument must be
of comparable quality in the opinion of the Investment Adviser. The assets of
the Portfolio may be invested in non-U.S. dollar denominated and U.S. dollar
denominated short-term instruments, including U.S. dollar denominated repurchase
agreements. Cash is held for the Portfolio in demand deposit accounts with the
Portfolio's custodian bank.

When-Issued and Delayed Delivery Securities

The Portfolio may purchase securities 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 are fixed on the transaction date. The securities so purchased
are subject to market fluctuation and no interest accrues to the Portfolio until
delivery and payment take place.

At the time the commitment to purchase securities for the Portfolio 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 security
may be valued at less than the purchase price. Commitments for such when-issued
securities are made only when there is an intention of actually acquiring the
securities. To facilitate such acquisitions, a segregated account with Brown
Brothers Harriman & Co. (the Custodian) is maintained for the Portfolio with
liquid assets in an amount at least equal to such commitments. Such segregated
account consists of liquid assets marked to the market daily, with additional
liquid assets added when necessary to insure that at all times the value of such
account is equal to the commitments. On delivery dates for such transactions,
such obligations are met from maturities or sales of the securities held in the
segregated account and/or from cash flow. If the right to acquire a when-issued
security is disposed of prior to its acquisition, the Portfolio could, as with
the disposition of any other portfolio obligation, incur a gain or loss due to
market fluctuation. When-issued commitments for the Portfolio may not be entered
into if such commitments exceed in the aggregate 15% of the market value of the
Portfolio's total assets, less liabilities other than the obligations created by
when-issued commitments.

Derivative Instruments

13
<PAGE>
securities, and to the extent it may invest in foreign currency-denominated
securities, may enter into swap agreements with respect to foreign currencies.
The Portfolio may invest in structured securities which may be issued by a
trust. If other types of financial instruments, including other types of
options, futures contracts, or futures options are traded in the future, the
Portfolio may also use those instruments, provided that the Portfolio's Trustees
determine that their use is consistent with the Portfolio's investment
objective.

The value of some derivative instruments in which the Portfolio may invest may
be particularly sensitive to changes in prevailing interest rates, and, like the
other investments of the Portfolio, the ability of the Portfolio to successfully
utilize these instruments may depend in part upon the ability of the Adviser to
forecast interest rates and other economic factors correctly. If the Adviser
incorrectly forecasts such factors and has taken positions in derivative
instruments contrary to prevailing market trends, the Portfolio could be exposed
to the risk of loss.

The Portfolio might not employ any of the strategies described below, and no
assurance can be given that any strategy used will succeed. If the Adviser
incorrectly forecasts interest rates, market values or other economic factors in
utilizing a derivatives strategy for the Portfolio, the Portfolio might have
been in a better position if it had not entered into the transaction at all.
Also, suitable derivative transactions may not be available in all
circumstances. The use of these strategies involves certain special risks,
including a possible imperfect correlation, or even no correlation, between
price movements of derivative instruments and price movements of related
investments. While some strategies involving derivative instruments can reduce
the risk of loss, they can also reduce the opportunity for gain or even result
in losses by offsetting favorable price movements in related investments or
otherwise, due to the possible inability of a Fund to purchase or sell a
portfolio security at a time that otherwise would be favorable or the possible
need to sell a portfolio security at a disadvantageous time because the
Portfolio is required to maintain asset coverage or offsetting positions in
connection with transactions in derivative instruments, and the possible
inability of the Portfolio to close out or to liquidate its derivatives
positions. In addition, the Portfolio's use of such instruments may cause the
Portfolio to realize higher amounts of short-term capital gains (generally taxed
at ordinary income tax rates) than if it had not used such instruments.

Options on Securities and Indexes

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<PAGE>
underlying the option (or the cash value of the index) at a specified exercise
price at any time during the term of the option. The writer of an option on a
security has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price or to pay the exercise
price upon delivery of the underlying security. Upon exercise, the writer of an
option on an index is obligated to pay the difference between the cash value of
the index and the exercise price multiplied by the specified multiplier for the
index option. (An index is designed to reflect features of a particular
financial or securities market, a specific group of financial instruments or
securities, or certain economic indicators.)

The Portfolio will write call options and put options only if they are
"covered." In the case of a call option on a security, the option is "covered"
if the Portfolio owns the security underlying the call or has an absolute and
immediate right to acquire that security without additional cash consideration
(or, if additional cash consideration is required, cash or other assets
determined to be liquid by the Adviser in accordance with procedures established
by the Portfolio's Board of Trustees, in such amount are segregated by its
Custodian) upon conversion or exchange of other securities held by the
Portfolio. For a call option on an index, the option is covered if the Portfolio
maintains with its Custodian assets determined to be liquid by the Adviser in
accordance with procedures established by the Portfolio's Board of Trustees, in
an amount equal to the contract value of the index. A call option is also
covered if the Portfolio holds a call on the same security or index as the call
written where the exercise price of the call held is (i) equal to or less than
the exercise price of the call written, or (ii) greater than the exercise price
of the call written, provided the difference is maintained by the Portfolio in
segregated assets determined to be liquid by the Adviser in accordance with
procedures established by the Porfolio's Board of Trustees. A put option on a
security or an index is "covered" if the Portfolio segregates assets determined
to be liquid by the Adviser in accordance with procedures established by the
Portfolio's Board of Trustees equal to the exercise price. A put option is also
covered if the Portfolio holds a put on the same security or index as the put
written where the exercise price of the put held is (i) equal to or greater than
the exercise price of the put written, or (ii) less than the exercise price of
the put written, provided the difference is maintained by the Portfolio in
segregated assets determined to be liquid by the Adviser in accordance with
procedures established by the Portfolio's Board of Trustees.

15
<PAGE>
transaction if the cost of the closing option is less than the premium received
from writing the option, or, if it is more, the Portfolio will realize a capital
loss. If the premium received from a closing sale transaction is more than the
premium paid to purchase the option, the Portfolio will realizes a capital gain
or, if it is less, the Portfolio will realize a capital loss. The principal
factors affecting the market value of a put or a call option include supply and
demand, interest rates, the current market price of the underlying security or
index in relation to the exercise price of the option, the volatility of the
underlying security or index, and the time remaining until the expiration date.

The premium paid for a put or call option purchased by the Portfolio is an asset
of the Portfolio. The premium received for an option written by the Portfolio is
recorded as a deferred credit. The value of an option purchased or written is
marked to market daily and is valued at the closing price on the exchange on
which it is traded or, if not traded on an exchange or no closing price is
available, at the mean between the last bid and asked prices.

Risks Associated with Options on Securities and Indexes

16
<PAGE>
There can be no assurance that a liquid market will exist when the Portfolio
seeks to close out an option position. If the Portfolio were unable to close out
an option that it had purchased on a security, it would have to exercise the
option in order to realize any profit or the option may expire worthless. If the
Portfolio were unable to close out a covered call option that it had written on
a security, it would not be able to sell the underlying security unless the
option expired without exercise. As the writer of a covered call option, the
Portfolio forgoes, during the option's life, the opportunity to profit from
increases in the market value of the security covering the call option above the
sum of the premium and the exercise price of the call.

Options on Foreign Currencies

Futures Contracts and Options on Futures Contracts

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<PAGE>
contract on an index is an agreement pursuant to which two parties agree to take
or make delivery of an amount of cash equal to the difference between the value
of the index at the close of the last trading day of the contract and the price
at which the index contract was originally written. Although the value of an
index might be a function of the value of certain specified securities, no
physical delivery of these securities is made. A public market exists in futures
contracts covering a number of indexes as well as financial instruments and
foreign currencies, including: U.S. Treasury bonds; U.S. Treasury notes; GNMA
Certificates; three-month U.S. Treasury bills; 90-day commercial paper; bank
certificates of deposit; Eurodollar certificates of deposit; the Australian
dollar; the Canadian dollar; the British pound; the German mark; the Japanese
yen; the French franc; the Swiss franc; the Mexican peso; and certain
multinational currencies, such as the euro. It is expected that other futures
contracts will be developed and traded in the future.

The Portfolio may purchase and write call and put futures options. Futures
options possess many of the same characteristics as options on securities and
indexes (discussed above). A futures option gives the holder the right, in
return for the premium paid, to assume a long position (call) or short position
(put) in a futures contract at a specified exercise price at any time during the
period of the option. Upon exercise of a call option, the holder acquires a long
position in the futures contract and the writer is assigned the opposite short
position. In the case of a put option, the opposite is true.

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<PAGE>
official settlement price of the exchange on which it is traded. Each day the
Portfolio pays or receives cash, called "variation margin," equal to the daily
change in value of the futures contract. This process is known as "marking to
market." Variation margin does not represent a borrowing or loan by the
Portfolio but is instead a settlement between the Portfolio and the broker of
the amount one would owe the other if the futures contract expired. In computing
daily net asset value, the Portfolio will mark to market its open futures
positions.

The Portfolio is also required to deposit and maintain margin with respect to
put and call options on futures contracts written by it. Such margin deposits
will vary depending on the nature of the underlying futures contract (and the
related initial margin requirements), the current market value of the option,
and other futures positions held by the Portfolio.

Other Considerations

19
<PAGE>
contract. Alternatively, the Portfolio may "cover" its position by owning the
instruments underlying the contract (or, in the case of an index futures
contract, a portfolio with a volatility substantially similar to that of the
index on which the futures contract is based), or by holding a call option
permitting the Portfolio to purchase the same futures contract at a price no
higher than the price of the contract written by the Portfolio (or at a higher
price if the difference is maintained in liquid assets with the Portfolio's
Custodian).

When selling a call option on a futures contract, the Portfolio will maintain
with its Custodian (and mark-to-market on a daily basis) assets determined to be
liquid by the Adviser in accordance with procedures established by the
Portfolio's Board of Trustees, that, when added to the amounts deposited with a
futures commission merchant as margin, equal the total market value of the
futures contract underlying the call option. Alternatively, the Portfolio may
cover its position by entering into a long position in the same futures contract
at a price no higher than the strike price of the call option, by owning the
instruments underlying the futures contract, or by holding a separate call
option permitting the Portfolio to purchase the same futures contract at a price
not higher than the strike price of the call option sold by the Portfolio.

To the extent that securities with maturities greater than one year are used to
segregate assets to cover the Portfolio's obligations under futures contracts
and related options, such use will not eliminate the risk of a form of leverage,
which may tend to exaggerate the effect on net asset value of any increase or
decrease in the market value of the Portfolio's portfolio, and may require
liquidation of portfolio positions when it is not advantageous to do so.
However, any potential risk of leverage resulting from the use of securities
with maturities greater than one year may be mitigated by the overall duration
limit on a Portfolio's portfolio of securities. Thus, the use of a longer-term
security may require the Portfolio to hold offsetting short-term securities to
balance the Portfolio's portfolio of securities such that the Portfolio's
duration does not exceed the maximum permitted for the Portfolio in the
Prospectus.

Risks Associated with Futures and Futures Options

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<PAGE>
imperfection of correlation depends on circumstances such as variations in
speculative market demand for futures and futures options on securities,
including technical influences in futures trading and futures options, and
differences between the financial instruments being hedged and the instruments
underlying the standard contracts available for trading in such respects as
interest rate levels, maturities, and creditworthiness of issuers. A decision as
to whether, when and how to hedge involves the exercise of skill and judgment,
and even a well-conceived hedge may be unsuccessful to some degree because of
market behavior or unexpected interest rate trends.

Futures contracts on U.S. Government securities historically have reacted to an
increase or decrease in interest rates in a manner similar to that in which the
underlying U.S. Government securities reacted. Thus, the anticipated spread
between the price of the futures contract and the hedged security may be
distorted due to differences in the nature of the markets. The spread also may
be distorted by differences in initial and variation margin requirements, the
liquidity of such markets and the participation of speculators in such markets.

Reset Options

"Yield Curve" Options
Options on the shape of the yield curve. Yield curve options allow buyers to

21
<PAGE>

protect themselves from adverse movements in the yield curve. Yield curve
options are often based on the difference in the yields of bonds of different
maturities.

Additional Risks of Trading Options

Swap Agreements

22
<PAGE>
agreement based on the relative values of the positions held by each party to
the agreement (the "net amount"). The Portfolio's current obligations under a
swap agreement will be accrued daily (offset against any amounts owed to the
Portfolio) and any accrued but unpaid net amounts owed to a swap counterparty
will be covered by the segregation of assets determined to be liquid by the
Adviser in accordance with procedures established by the Portfolio's Board of
Trustees, to avoid any potential leveraging of the Portfolio's portfolio of
securities. Obligations under swap agreements so covered will not be construed
to be "senior securities" for purposes of the Portfolio's investment restriction
concerning senior securities. The Portfolio will not enter into a swap agreement
with any single party if the net amount owed or to be received under existing
contracts with that party would exceed 5% of the Portfolio's assets.

This exemption is not exclusive, and participants may continue to rely on

23
<PAGE>
existing exclusions for swaps, such as the Policy Statement issued in July 1989
which recognized a safe harbor for swap transactions from regulation as futures
or commodity option transactions under the CEA or its regulations. The Policy
Statement applies to swap transactions settled in cash that (1) have
individually tailored terms, (2) lack exchange-style offset and the use of a
clearing organization or margin system, (3) are undertaken in conjunction with a
line of business, and (4) are not marketed to the public.

Options on Swaps

The Portfolio may enter into options contracts on interest rate swaps, commonly
referred to as swaptions. The buyer of a swaption has the right to enter into an
interest rate swap agreement by some specified date in the future. The swaption
agreement will specify whether the buyer of the swaption will be a fixed-rate
receiver or a fixed-rate payer. The writer of the swaption becomes the
counterparty if the buyer exercise.

Structured Securities

Foreign Investments

24
<PAGE>
depend on expected disbursements from foreign governments, multilateral agencies
and others to reduce principal and interest arrearages on their debt. The
commitment on the part of these governments, agencies and others to make such
disbursements may be conditioned on a governmental entity's implementation of
economic reforms and/or economic performance and the timely service of such
debtor's obligations. Failure to implement such reforms, achieve such levels of
economic performance or repay principal or interest when due may result in the
cancellation of such third parties' commitments to lend funds to the
governmental entity, which may further impair such debtor's ability or
willingness to service its debts in a timely manner. Consequently, governmental
entities may default on their sovereign debt. Holders of sovereign debt
(including the Portfolio) may be requested to participate in the rescheduling of
such debt and to extend further loans to governmental entities. There is no
bankruptcy proceeding by which sovereign debt on which governmental entities
have defaulted may be collected in whole or in part.

Foreign Currency Transactions

Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also limit the opportunity
for gain if the value of the hedged currency should rise. Moreover, it may not
be possible for the Portfolio to hedge against a devaluation that is so
generally anticipated that the Portfolio is not able to contract to sell the

25
<PAGE>

currency at a price above the devaluation level it anticipates.

If the Portfolio enters into a forward contract to purchase foreign currency,
the Custodian or the Adviser will segregate liquid assets.

Forward Exchange Contracts

While the Portfolio may enter into foreign currency exchange transactions to
reduce the risk of loss due to a decline in the value of the hedged currency,

26
<PAGE>
these transactions also tend to limit the potential for gain. Forward foreign
exchange contracts do not eliminate fluctuations in the prices of the
Portfolio's securities or in foreign exchange rates, or prevent loss if the
prices of these securities should decline. The precise matching of the forward
contract amounts and the value of the securities involved is not generally
possible because the future value of such securities in foreign currencies
changes as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly unlikely.

Equity Investments

Borrowings

27
<PAGE>
restore the 300% asset coverage, even though it may be disadvantageous from an
investment standpoint to sell securities at that time. As noted below, the
Portfolio also may enter into certain transactions, including reverse repurchase
agreements, mortgage dollar rolls, and sale-buybacks, that can be viewed as
constituting a form of borrowing or financing transaction by the Portfolio. To
the extent the Portfolio covers its commitment under a reverse repurchase
agreement (or economically similar transaction) by the segregation of assets
determined in accordance with procedures adopted by the Trustees, equal in value
to the amount of the Portfolio's commitment to repurchase, such an agreement
will not be considered a "senior security" by the Portfolio and therefore will
not be subject to the 300% asset coverage requirement otherwise applicable to
borrowings by the Portfolio. Borrowing will tend to exaggerate the effect on net
asset value of any increase or decrease in the market value of the Portfolio's
portfolio of securities. Money borrowed will be subject to interest costs which
may or may not be recovered by appreciation of the securities purchased. The
Portfolio also may be required to maintain minimum average balances in
connection with such borrowing or to pay a commitment or other fee to maintain a
line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate.

In addition to borrowing for temporary purposes, the Portfolio may enter into
reverse repurchase agreements, mortgage dollar rolls, and economically similar
transactions. A reverse repurchase agreement involves the sale of a
portfolio-eligible security by the Portfolio, coupled with its agreement to
repurchase the instrument at a specified time and price. Under a reverse
repurchase agreement, the Portfolio continues to receive any principal and
interest payments on the underlying security during the term of the agreement.
The Portfolio typically will segregate assets determined to be liquid by the
Adviser in accordance with procedures established by the Portfolio's Trustees,
equal (on a daily mark-to-market basis) to its obligations under reverse
repurchase agreements. However, reverse repurchase agreements involve the risk
that the market value of securities retained by the Portfolio may decline below
the repurchase price of the securities sold by the Portfolio which it is
obligated to repurchase. To the extent that positions in reverse repurchase
agreements are not covered through the segregation of liquid assets at least
equal to the amount of any forward purchase commitment, such transactions would
be subject to the Portfolio's limitations on borrowings, which would restrict
the aggregate of such transactions (plus any other borrowings) to 33 1/3% of the
Portfolio's total assets.

A "mortgage dollar roll" is similar to a reverse repurchase agreement in
certain respects. In a "dollar roll" transaction the Portfolio sells a
mortgage-related security, such as a security issued by the Government National
Mortgage Association ("GNMA"), to a dealer and simultaneously agrees to
repurchase a similar security (but not the same security) in the future at a
pre-determined price. A "dollar roll" can be viewed, like a reverse repurchase
agreement, as a collateralized borrowing in which a Fund pledges a
mortgage-related security to a dealer to obtain cash. Unlike in the case of
reverse repurchase agreements, the dealer with which the Portfolio enters into a
dollar roll transaction is not obligated to return the same securities as those
originally sold by the Portfolio, but only securities which are "substantially
identical." To be considered "substantially identical," the securities returned
to the Portfolio generally must: (1) be collateralized by the same types of
underlying mortgages; (2) be issued by the same agency and be part of the same
program; (3) have a similar original stated maturity; (4) have identical net
coupon rates; (5) have similar market yields (and therefore price); and (6)
satisfy "good delivery" requirements, meaning that the aggregate principal
amounts of the securities delivered and received back must be within 2.5% of the
initial amount delivered.

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<PAGE>
The Portfolio's obligations under a dollar roll agreement must be covered by
segregated liquid assets equal in value to the securities subject to repurchase
by the Portfolio. As with reverse repurchase agreements, to the extent that
positions in dollar roll agreements are not covered by segregated liquid assets
at least equal to the amount of any forward purchase commitment, such
transactions would be subject to the Portfolio's limitations on borrowings.
Furthermore, because dollar roll transactions may be for terms ranging between
one and six months, dollar roll transactions may be deemed "illiquid" and
subject to a Portfolio's overall limitations on investments in illiquid
securities. The Portfolio also may effect simultaneous purchase and sale
transactions that are known as "sale-buybacks". A sale-buyback is similar to a
reverse repurchase agreement, except that in a sale-buyback, the counterparty
who purchases the security is entitled to receive any principal or interest
payments made on the underlying security pending settlement of the Portfolio's
repurchase of the underlying security. The Portfolio's obligations under a
sale-buyback typically would be offset by liquid assets equal in value to the
amount of the Portfolio's forward commitment to repurchase the subject security.

Repurchase Agreements

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

29
<PAGE>
Reverse Repurchase Agreements

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

Rule 144A Securities

Illiquid Securities

30
<PAGE>
approximately the amount at which the Portfolio has valued the securities.
Illiquid securities are considered to include, among other things, written
over-the-counter options, securities or other liquid assets being used as cover
for such options, repurchase agreements with maturities in excess of seven days,
certain loan participation interests, fixed time deposits which are not subject
to prepayment or provide for withdrawal penalties upon prepayment (other than
overnight deposits), and other securities whose disposition is restricted under
the federal securities laws (other than securities issued pursuant to Rule 144A
under the 1933 Act and certain commercial paper that the Adviser has determined
to be liquid under procedures approved by the Portfolio's Trustees).

INVESTMENT RESTRICTIONS

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

Except that the Corporation may invest all of the Fund's assets in an
open-end investment company with substantially the same investment objective,
policies and restrictions as the Fund, the Portfolio and the Corporation, with
respect to the Fund, may not:

31
<PAGE>
(4) purchase or sell real estate, although it may purchase securities secured by
real estate or interests therein, or securities issued by companies which invest
in real estate, or interests therein;

(7) borrow money, issue senior securities, or pledge, mortgage or hypothecate
its assets, except that the Portfolio may (i) borrow from banks or enter into
reverse repurchase agreements, or employ similar investment techniques, and
pledge its assets in connection therewith, but only if immediately after each
borrowing there is asset coverage of 300% and (ii) enter into transactions in
options, futures, options on futures, and other derivative instruments as
described in the Prospectus and in this Statement of Additional Information (the
deposit of assets in escrow in connection with the writing of covered put and
call options and the purchase of securities on a when-issued or delayed delivery
basis, collateral arrangements with respect to initial or variation margin
deposits for futures contracts and commitments entered into under swap
agreements or other derivative instruments, will not be deemed to be pledges of
the Portfolio's assets);

32
<PAGE>
Non-Fundamental Restrictions. The following polices are not fundamental
and may be changed without shareholder approval. The Portfolio or the
Corporation, on behalf of the Fund, may not as a matter of operating policy
(except that the Corporation may invest all of the Fund's assets in an open-end
investment company with substantially the same investment objective, policies
and restrictions as the Fund):

(ii) invest more than 5% of the assets of the Portfolio (taken at market
value at the time of investment) in any combination of interest only,
principal only, or inverse floating rate securities;

(iv) invest less than 65% of the value of the total assets of the Portfolio
in a broad range of investment grade fixed income securities.

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

33
<PAGE>

repurchase, such an agreement will not be considered a "senior security" by the
Portfolio and therefore will not be subject to the 300% asset coverage
requirement otherwise applicable to borrowings by the Portfolio.

The staff of the SEC has taken the position that purchased over-the-counter
("OTC") options and the assets used as cover for written OTC options are
illiquid securities. Therefore, the Portfolio has adopted an investment policy
pursuant to which the Portfolio will not purchase or sell OTC options if, as a
result of such transactions, the sum of the market value of OTC options
currently outstanding which are held by the Portfolio, the market value of the
underlying securities covered by OTC call options currently outstanding which
were sold by the Portfolio and margin deposits on the Portfolio's existing OTC
options on futures contracts exceeds 15% of the net assets of the Portfolio,
taken at market value, together with all other assets of the Portfolio which are
illiquid or are otherwise not readily marketable. However, if an OTC option is
sold by the Portfolio to a primary U.S. Government securities dealer recognized
by the Federal Reserve Bank of New York and if the Portfolio has the
unconditional contractual right to repurchase such OTC option from the dealer at
a predetermined price, then the Portfolio will treat as illiquid such amount of
the underlying securities equal to the repurchase price less the amount by which
the option is "in-the-money" (i.e., current market value of the underlying
securities minus the option's strike price). The repurchase price with the
primary dealers is typically a formula price which is generally based on a
multiple of the premium received for the option, plus the amount by which the
option is "in-the-money." This policy is not a fundamental policy of the
Portfolio and may be amended by the Portfolio's Trustees without the approval of
shareholders. However, the Portfolio will not change or modify this policy prior
to the change or modification by the SEC staff of its position.

DIRECTORS, TRUSTEES AND OFFICERS
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The Corporation's Directors, in addition to supervising the actions of the
Administrator of the Corporation and Distributor of the Fund, as set forth
below, decide upon matters of general policy with respect to the Corporation.
The Portfolio's Trustees, in addition to supervising the actions of the
Portfolio's Investment Adviser, decide upon matters of general policy with
respect to the Portfolio.

Because of the services rendered to the Portfolio by the Investment Adviser and
to the Corporation and the Portfolio by their respective Administrators, the
Corporation and the Portfolio require no employees, and their respective
officers (all of whom are employed by 59 Wall Street Administrators), other than
the Chairman, receive no compensation from the Fund or Portfolio.

34
<PAGE>
The Directors of the Corporation, Trustees of the Portfolio and executive
officers of the Corporation and the Portfolio, their principal occupations
during the past five years (although their titles may have varied during the
period) and business addresses are:

DIRECTORS OF THE CORPORATION AND TRUSTEES OF THE PORTFOLIO

35
<PAGE>

1999); Retired; Director of Investments, Pennsylvania Public School Employees'
Retirement System (prior to December 1997). His business address is 12664 Lazy
Acres Court, Nevada City, CA 95959.

J. ANGUS IVORY - Director (since October 1999); Trustee of The 59 Wall
Street Trust (since October 1999); Trustee of the Portfolio and the BBH
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 Saddlery;
Advisor, RAF Central Fund; Committee Member, St. Thomas Hospital Pain Clinic
(since 1999).

OFFICERS OF THE CORPORATION AND THE PORTFOLIO

LINWOOD C. DOWNS - Treasurer; Treasurer of the Portfolio and the BBH
Portfolios; Senior Vice President and Treasurer of SFG.

MOLLY S. MUGLER -- Secretary; Secretary of the Portfolio and the BBH
Portfolios; Vice President and Secretary of SFG; Secretary of 59 Wall Street
Distributors and 59 Wall Street Administrators.

SUSAN JAKUBOSKI - Assistant Treasurer; Assistant Treasurer and
Assistant Secretary of the Portfolio and the BBH Portfolios; Vice President,
Assistant Secretary and Assistant Treasurer of Signature Financial Group
(Cayman) Limited.

36
<PAGE>

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

**These Directors are members of the Audit Committee of the Corporation.

(1) The Portfolios consist of the following active investment companies:
BBH U.S. Money Market Portfolio, BBH U.S. Equity Portfolio, BBH
European Equity Portfolio, BBH Pacific Basin Equity Portfolio, BBH
International Equity Portfolio, BBH High Yield Fixed Income Portfolio
and BBH Global Equity Portfolio and the following inactive investment
companies: BBH U.S. Balanced Growth Portfolio and BBH Intermediate
Tax-Exempt Bond Portfolio.

Directors of the Corporation/Trustees of the Portfolio

The Directors of the Corporation and Trustees of the Portfolio 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 Portfolio and any
other active Portfolios having the same Board of Trustees based upon their
respective net assets. In addition, each series of the Corporation and The 59
Wall Street Trust, the Portfolio and each other active BBH Portfolio which has
commenced operations pays an annual fee to each Director/Trustee of $1,000.

37
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>

J.V. Shields, Jr., $250 none none $36,000
Director/Trustee

Eugene P. Beard, $250 none none $31,000
Director/Trustee

Richard L. Carpenter, $250 none none $31,000
Director/Trustee

Clifford A. Clark, $250 none none $31,000
Director/Trustee

David P. Feldman, $250 none none $31,000
Director/Trustee

J. Angus Ivory, $250 none none $31,000
Director/Trustee

Alan G. Lowy, $250 none none $31,000
Director/Trustee

Arthur D. Miltenberger, $250 none none $31,000
Director/Trustee

David M. Seitzman, $250 none none $31,000
Director/Trustee

<FN>

* The Fund Complex consists of the Corporation, The 59 Wall Street Trust (which
currently consists of four series) and the eight active BBH Portfolios.

**Estimated to be paid as of October 31, 2000.
</FN>
</TABLE>

By virtue of the responsibilities assumed by Brown Brothers Harriman & Co. under
the Investment Advisory Agreement with the Portfolio, and by Brown Brothers

38
<PAGE>

Harriman & Co. under the Administration Agreement with the Corporation, and by
Brown Brothers Harriman Trust Company LLC of New York ("Brown Brothers Harriman
Trust Company LLC") under the Administration Agreement with the Portfolio (see
"Investment Adviser" and "Administrator"), the Corporation and the Portfolio do
not require employees other than its officers, and none of its officers devote
full time to the affairs of the Corporation or the Portfolio, as the case may
be, or, other than the Chairman, receive any compensation from the Corporation
or the Portfolio. Prior to May 6, 2000, the name of Brown Brothers Harriman
Trust Company LLC was Brown Brothers Harriman Trust Company.

As of April 30, 2000, the Corporation's Directors and officers as a group
beneficially owned less than 1% of the outstanding shares of the Corporation.

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

The investment advisory fee paid to the Investment Adviser is calculated daily
and paid monthly at an annual rate equal to 0.30% of the Portfolio's average
daily net assets.

39
<PAGE>

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. Pursuant to a
license agreement between the Portfolio and Brown Brothers Harriman & Co. dated
May 9, 2000, the Portfolio may continue to use in its name BBH. The agreement
may be terminated by Brown Brothers Harriman & Co. at any time upon written
notice to the Portfolio upon the expiration or earlier termination of any
investment advisory agreement between the Portfolio and Brown Brothers Harriman
& Co. Termination of the agreement would require the Portfolio to change its
name to eliminate all reference to BBH.

ADMINISTRATOR
-------------------------------------------------------------------
Brown Brothers Harriman & Co. acts as Administrator for the Corporation and
Brown Brothers Harriman Trust Company LLC acts as Administrator of the
Portfolio. Brown Brothers Harriman Trust Company LLC is a wholly-owned
subsidiary of Brown Brothers Harriman & Co. In its capacity as Administrator of
the Corporation, Brown Brothers Harriman & Co. administers all aspects of the
Corporation's operations subject to the supervision of the Corporation's
Directors except as set forth below under "Distributor". In connection with its
responsibilities as Administrator and at its own expense, Brown Brothers
Harriman & Co. (i) provides the Corporation with the services of persons
competent to perform such supervisory, administrative and clerical functions as
are necessary in order to provide effective administration of the Corporation,
including the maintenance of certain books and records; (ii) oversees the
performance of administrative and professional services to the Corporation by
others, including the Fund's Custodian, Transfer and Dividend Disbursing Agent;
(iii) provides the Corporation with adequate office space and communications and
other facilities; and (iv) prepares and/or arranges for the preparation, but
does not pay for, the periodic updating of the Corporation's registration
statement and the Fund's prospectus, the printing of such documents for the
purpose of filings with the SEC and state securities administrators, and the
preparation of tax returns for the Fund and reports to the Fund's shareholders
and the SEC.

40
<PAGE>

Brown Brothers Harriman Trust Company LLC, in its capacity as Administrator of
the Portfolio, administers all aspects of the Portfolio's operations subject to
the supervision of the Portfolio's Trustees except as set forth above under
"Investment Adviser". In connection with its responsibilities as Administrator
for the Portfolio and at its own expense, Brown Brothers Harriman Trust Company
LLC (i) provides the Portfolio with the services of persons competent to perform
such supervisory, administrative and clerical functions as are necessary in
order to provide effective administration of the Portfolio, including the
maintenance of certain books and records, receiving and processing requests for
increases and decreases in the beneficial interests in the Portfolio,
notification to the Investment Adviser of available funds for investment,
reconciliation of account information and balances between the Custodian and the
Investment Adviser, and processing, investigating and responding to investor
inquiries; (ii) oversees the performance of administrative and professional
services to the Portfolio by others, including the Custodian; (iii) provides the
Portfolio with adequate office space and communications and other facilities;
and (iv) prepares and/or arranges for the preparation, but does not pay for, the
periodic updating of the Portfolio's registration statement for filing with the
SEC, and the preparation of tax returns for the Portfolio and reports to
investors and the SEC.

41
<PAGE>

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 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

42
<PAGE>

currently provide administration and distribution services for other registered
investment companies. The Corporation pays for the preparation, printing and
filing of copies of the Corporation's registration statements and the Fund's
prospectus as required under federal and state securities laws.

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

The Distribution Agreement (dated September 5, 1990, as amended and restated
February 12, 1991) between the Corporation and 59 Wall Street Distributors
remains in effect for two years from the date of its execution and thereafter,
but only so long as the continuance of such agreement is specifically approved
at least annually in conformity with the requirements of the 1940 Act. The
Distribution Agreement was most recently approved by the Independent Directors
of the Corporation on February 8, 2000. The agreement terminates automatically
if assigned by either party thereto and is terminable with respect to the Fund
at any time without penalty by a vote of a majority of the Directors of the
Corporation or by a vote of the holders of a "majority of the Fund's outstanding
voting securities" (as defined in the 1940 Act). (See "Additional Information".)
The Distribution Agreement is terminable with respect to the Fund by the
Corporation's Directors or shareholders of the Fund on 60 days' written notice
to 59 Wall Street Distributors. The agreement is terminable by 59 Wall Street
Distributors on 90 days' written notice to the Corporation.

SHAREHOLDER SERVICING AGENT
-----------------------------------------------------------------
The Corporation has entered into a shareholder servicing agreement with Brown
Brothers Harriman & Co. pursuant to which Brown Brothers Harriman & Co., as
agent for the Corporation with respect to the Fund, among other things: answers
inquiries from shareholders of and prospective investors in the Fund regarding
account status and history, the manner in which purchases and redemptions of
Fund shares may be effected and certain other matters pertaining to the Fund;
assists shareholders of and prospective investors in the Fund in designating and
changing dividend options, account designations and addresses; and provides such
other related services as the Corporation or a shareholder of or prospective
investor in the Fund may reasonably request. For these services, Brown Brothers
Harriman & Co. receives from the Fund an annual fee, computed daily and payable
monthly, equal to 0.25% of the Fund's average daily net assets represented by
shares owned during the period for which payment was being made by shareholders
who did not hold their account with an eligible institution.

43
<PAGE>

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 customer's shares in its name or its nominee name on the
shareholder records of the Corporation; assists in processing purchase and
redemption transactions; arranges for the wiring of funds; transmits and
receives funds in connection with customer orders to purchase or redeem shares
of the Fund; provides periodic statements showing a customer's account balance
and, to the extent practicable, integrates such information with information
concerning other customer transactions otherwise effected with or through it;
furnishes, either separately or on an integrated basis with other reports sent
to a customer, monthly and annual statements and confirmations of all purchases
and redemptions of Fund shares in a customer's account; transmits proxy
statements, annual reports, updated prospectuses and other communications from
the Corporation to its customers; and receives, tabulates and transmits to the
Corporation proxies executed by its customers with respect to meetings of
shareholders of the Fund. For these services, 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.

EXPENSE PAYMENT AGREEMENT
-----------------------------------------------------------------
Under an expense payment agreement dated May 9, 2000, 59 Wall Street

44
<PAGE>

Administrators pays the Fund's expenses (see "Expense Table" in the Prospectus),
other than fees paid to Brown Brothers Harriman & Co. under the Corporation's
Administration Agreement and other than expenses relating to the organization of
the Fund. In return, 59 Wall Street Administrators receives a fee from the Fund
such that after such payment the aggregate expenses of the Fund do not exceed an
agreed upon annual rate, currently 0.75% of the average daily net assets of the
Fund. Such fees are computed daily and paid monthly. The expense payment
agreement will terminate on November 1, 2005. If there had been no expense
payment agreement, the Directors of the Corporation estimate that, at the Fund's
current level, the total operating expenses of the Fund may increase to
approximately 1.05% of the average annual net assets of the Fund. The expenses
of the Fund paid by 59 Wall Street Administrators under the agreement include
the shareholder servicing/eligible institution fees, the compensation of the
Directors of the Corporation; governmental fees; interest charges; taxes;
membership dues in the Investment Company Institute allocable to the Fund; fees
and expenses of independent auditors, of legal counsel and of any transfer
agent, custodian, registrar or dividend disbursing agent of the Fund; insurance
premiums; expenses of calculating the net asset value of shares of the Fund;
expenses of preparing, printing and mailing prospectuses, reports, notices,
proxy statements and reports to shareholders and to governmental officers and
commissions; expenses of shareholder meetings; and expenses relating to the
issuance, registration and qualification of shares of the Fund.

Under an expense payment agreement dated May 9, 2000, Brown Brothers Harriman
Trust Company LLC pays the expenses of the Portfolio, other than fees paid to
Brown Brothers Harriman Trust Company LLC under the Portfolio's Administration
Agreement and other than expenses relating to the organization of the Portfolio.
In return, Brown Brothers Harriman Trust Company LLC receives a fee from the
Portfolio such that after such payment the aggregate expenses of the Portfolio
do not exceed an agreed upon annual rate, currently 0.40% of the average daily
net assets of the Portfolio. Such fees are computed daily and paid monthly.

As Custodian for the Portfolio, it is responsible for maintaining books and

45
<PAGE>

records of portfolio transactions and holding the Portfolio's securities and
cash pursuant to a custodian agreement with the Portfolio. Cash is held for the
Portfolio in demand deposit accounts at the Custodian. Subject to the
supervision of the Administrator of the Portfolio, the Custodian maintains the
accounting and portfolio transaction records for the Portfolio and each day
computes the net asset value and net income of the Portfolio.

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

CODE OF ETHICS
-------------------------------------------------------------------
The Corporation, the Portfolio, the Adviser and the Distributor each have
adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act. Each code of
ethics permits personnel subject to such code of ethics to invest in securities,
including securities that may be purchased or held by the Portfolio. However,
the codes of ethics contain provisions and requirements designed to identify and
address certain conflicts of interest between personal investment activities and
the interests of the Portfolio. Of course, there can be no assurance that the
codes of ethics will be effective in identifying and addressing all conflicts of
interest relating to personal securities transactions. The code of ethics of the
Corporation, the Portfolio, the Adviser and the Distributor are on file with and
are available from the SEC (See "Additional Information" below).

46
<PAGE>

outstanding at the time the determination is made.

The value of investments listed on a securities exchange is based on the last
sale prices as of the close of regular trading of the New York Stock Exchange
(which is currently 4:00 P.M., New York time) or, in the absence of recorded
sales, at the average of readily available closing bid and asked prices on such
Exchange. Unlisted securities are valued at the average of the quoted bid and
asked prices in the over-the-counter market. The value of each security for
which readily available market quotations exist is based on a decision as to the
broadest and most representative market for such security.

Subject to the Corporation's compliance with applicable regulations, the
Corporation has reserved the right to pay the redemption price of shares of the
Fund, either totally or partially, by a distribution in kind of portfolio
securities (instead of cash). The securities so distributed would be valued at
the same amount as that assigned to them in calculating the net asset value for
the shares being sold. If a shareholder received a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash. The Corporation has elected, however, to be governed by Rule 18f-1
under the 1940 Act, as a result of which the Corporation is obligated with
respect to any one investor during any 90 day period to redeem shares of the
Fund solely in cash up to the lesser of $250,000 or 1% of the Fund's net assets
at the beginning of such 90 day period.

47
<PAGE>
COMPUTATION OF PERFORMANCE
-------------------------------------------------------------------

The average annual total rate of return of the Fund is calculated for any period
by (a) dividing (i) the sum of the aggregate net asset value per share on the
last day of the period of shares purchased with a $1,000 payment on the first
day of the period and the aggregate net asset value per share on the last day of
the period of shares purchasable with dividends and capital gains distributions
declared during such period with respect to shares purchased on the first day of
such period and with respect to shares purchased with such dividends and capital
gains distributions, by (ii) $1,000, (b) raising the quotient to a power equal
to 1 divided by the number of years in the period, and (c) subtracting 1 from
the result.

The total rate of return of the Fund for any specified period is calculated by
(a) dividing (i) the sum of the aggregate net asset value per share on the last
day of the period of shares purchased with a $1,000 payment on the first day of
the period and the aggregate net asset value per share on the last day of the
period of shares purchasable with dividends and capital gains distributions
declared during such period with respect to shares purchased on the first day of
such period and with respect to shares purchased with such dividends and capital
gains distributions, by (ii) $1,000, and (b) subtracting 1 from the result.

48
<PAGE>

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

49
<PAGE>

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

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

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

FEDERAL TAXES
-------------------------------------------------------------------

Each year, the Corporation intends to continue to qualify the Fund and elect
that the Fund be treated as a separate "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, the Fund is
not subject to federal income taxes on its net income and realized net long-term
capital gains that are distributed to its shareholders. A 4% non-deductible
excise tax is imposed on the Fund to the extent that certain distribution
requirements for the Fund for each calendar year are not met. The Corporation
intends to meet such requirements. The Portfolio is also not required to pay any
federal income or excise taxes. Under Subchapter M of the Code the Fund is not
subject to federal income taxes on amounts distributed to shareholders.

50
<PAGE>

securities of such issuer, and (ii) not more than 25% of the value of the Fund's
assets be represented by investments in the securities of any one issuer (other
than U.S. Government securities and securities of other investment companies).
Foreign currency gains that are not directly related to the Portfolio's business
of investing in stock or securities is included in the income that counts toward
the 30% gross income requirement described above but may be excluded by Treasury
Regulations from income that counts toward the 90% of gross income requirement
described above. In addition, in order not to be subject to federal income tax,
at least 90% of the Fund's net investment income and net short-term capital
gains earned in each year must be distributed to the Fund's shareholders. Under
the Code, gains or losses attributable to foreign currency contracts, or to
fluctuations in exchange rates between the time the Portfolio accrues income or
receivables or expenses or other liabilities denominated in a foreign currency
and the time it actually collects such income or pays such liabilities, are
treated as ordinary income or ordinary loss. Similarly, the Fund's share of
gains or losses on the disposition of debt securities held by the Portfolio, if
any, denominated in foreign currency, to the extent attributable to fluctuations
in exchange rates between the acquisition and disposition dates are also treated
as ordinary income or loss. 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 Portfolio lapses or is terminated
through a closing transaction, such as a repurchase of the option from its
holder, the Portfolio may realize a short-term capital gain or loss, depending
on whether the premium income is greater or less than the amount paid in the
closing transaction. If securities are sold pursuant to the exercise of a call
option written for them, the premium received would be added to the sale price
of the securities delivered in determining the amount of gain or loss on the
sale. The requirement that less than 30% of the Fund's gross income be derived
from gains from the sale of securities held for less than three months may limit
the Portfolio's ability to write options and engage in transactions involving
stock index futures.

51
<PAGE>

Redemption of Shares. Any gain or loss realized on the redemption of Fund shares
by a shareholder who is not a dealer in securities would be treated as long-term
capital gain or loss if the shares have been held for more than one year, and
otherwise as short-term capital gain or loss. However, any loss realized by a
shareholder upon the redemption of Fund shares held one year or less is treated
as a long-term capital loss to the extent of any long-term capital gains
distributions received by the shareholder with respect to such shares.
Additionally, any loss realized on a redemption or exchange of Fund shares is
disallowed to the extent the shares disposed of are replaced within a period of
61 days beginning 30 days before such disposition, such as pursuant to
reinvestment of a dividend or capital gains distribution in Fund shares.

52
<PAGE>

securities are generally treated as derived from U.S. sources, however, and
certain foreign currency gains and losses likewise are treated as derived from
U.S. sources. The limitation of the foreign tax credit is applied separately to
foreign source "passive income", such as the portion of dividends received from
the Fund which qualifies as foreign source income. In addition, the foreign tax
credit is allowed to offset only 90% of the alternative minimum tax imposed on
corporations and individuals. Because of these limitations, a shareholder may be
unable to claim a credit for the full amount of such shareholder's proportionate
share of the foreign income taxes paid from the Fund. Certain entities,
including corporations formed as part of corporate pension or profit-sharing
plans and certain charitable and other organizations described in Section 501
(c) of the Internal Revenue Code, as amended, that are generally exempt from
federal income taxes may not receive any benefit from the election by the
Corporation to "pass through" foreign income taxes to the Fund's shareholders.
In certain circumstances foreign taxes imposed with respect to the Fund's income
may not be treated as income taxes imposed on the Fund. Any such taxes would not
be included in the Fund's income, would not be eligible to be "passed through"
to Fund shareholders, and would not be eligible to be claimed as a foreign tax
credit or deduction by Fund shareholders. In particular, in certain
circumstances it may not be clear whether certain amounts of taxes deducted from
gross dividends paid to the Fund would, for U.S. federal income tax purposes, be
treated as imposed on the issuing corporation rather than the Fund.

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

53
<PAGE>

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 High
Yield Fixed Income Fund. The Board of Directors also has the power to designate
one or more series of shares of common stock and to classify and reclassify any
unissued shares with respect to such series. Currently there are seven such
series in addition to the Fund.

Each share of the Fund represents an equal proportional interest in the Fund
with each other share. Upon liquidation of the Fund, shareholders are entitled
to share pro rata in the net assets of the Fund available for distribution to
shareholders. Shareholders of the Fund are entitled to a full vote for each full
share held and to a fractional vote for fractional shares. Shareholders in the
Corporation do not have cumulative voting rights, and shareholders owning more
than 50% of the outstanding shares of the Corporation may elect all of the
Directors of the Corporation if they choose to do so and in such event the other
shareholders in the Corporation would not be able to elect any Director. The
Corporation is not required and has no current intention to hold meetings of
shareholders annually but the Corporation will hold special meetings of
shareholders when in the judgment of the Corporation's Directors it is necessary
or desirable to submit matters for a shareholder vote or as may be required by
the 1940 Act or as my be permitted by the Articles of Incorporation or By-laws.
Shareholders have under certain circumstances (e.g., upon application and
submission of certain specified documents to the Directors by a specified number
of shareholders) the right to communicate with other shareholders in connection
with requesting a meeting of shareholders for the purpose of removing one or
more Directors. Shareholders also have the right to remove one or more Directors
without a meeting by a declaration in writing by a specified number of
shareholders. Shares have no preemptive or conversion rights. The rights of
redemption are described in the Prospectus. Shares are fully paid and
non-assessable by the Corporation.

Stock certificates are not issued by the Corporation.

54
<PAGE>

The Portfolio is organized as a trust under the law of the State of New York.
The Portfolio's Declaration of Trust provides that the Fund and other entities
investing in the Portfolio (e.g., other investment companies, insurance company
separate accounts and common and commingled trust funds) are liable for all
obligations of the Portfolio. However, the risk of the Fund incurring financial
loss on account of such liability is limited to circumstances in which both
inadequate insurance existed and the Portfolio itself was unable to meet its
obligations. Accordingly, the Directors of the Corporation believe that neither
the Fund nor its shareholders will be adversely affected by reason of the
investment of all of the Fund's assets in the Portfolio. Each investor in the
Portfolio, including the Fund, may add to or reduce its investment in the
Portfolio on each day the New York Stock Exchange is open for regular trading.
At 4:00 P.M., New York time on each such business day, the value of each
investor's beneficial interest in the Portfolio is determined by multiplying the
net asset value of the Portfolio by the percentage, effective for that day,
which represents that investor's share of the aggregate beneficial interests in
the Portfolio. Any additions or withdrawals, which are to be effected on that
day, are then effected. The investor's percentage of the aggregate beneficial
interests in the Portfolio is then recomputed as the percentage equal to the
fraction (i) the numerator of which is the value of such investor's investment
in the Portfolio as of 4:00 P.M., New York time on such day plus or minus, as
the case may be, the amount of any additions to or withdrawals from the
investor's investment in the Portfolio effected on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of
4:00 P.M., New York time on such day plus or minus, as the case may be, the
amount of the net additions to or withdrawals from the aggregate investments in
the Portfolio by all investors in the Portfolio. The percentage so determined is
then applied to determine the value of the investor's interest in the Portfolio
as of 4:00 P.M., New York time on the following business day of the Portfolio.

Whenever the Corporation is requested to vote on a matter pertaining to the
Portfolio, the Corporation will vote its shares without a meeting of
shareholders of the Fund if the proposal is one, if which made with respect to
the Fund, would not require the vote of shareholders of the Fund, as long as
such action is permissible under applicable statutory and regulatory
requirements. For all other matters requiring a vote, the Corporation will hold
a meeting of shareholders of the Fund and, at the meeting of investors in the
Portfolio, the Corporation will cast all of its votes in the same proportion as
the votes of the Fund's shareholders even if all Fund shareholders did not vote.
Even if the Corporation votes all its shares at the Portfolio meeting, other
investors with a greater pro rata ownership in the Portfolio could have
effective voting control of the operations of the Portfolio.

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

55
<PAGE>

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.

56
<PAGE>

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

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

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

57
<PAGE>

The Corporation may withdraw the Fund's investment in the Portfolio as a result
of certain changes in the Portfolio's investment objective, policies or
restrictions or if the Board of Directors of the Corporation determines that it
is otherwise in the best interests of the Fund to do so. Upon any such
withdrawal, the Board of Directors of the Corporation would consider what action
might be taken, including the investment of all of the assets of the Fund in
another pooled investment entity or the retaining of an investment adviser to
manage the Fund's assets in accordance with the Fund's investment policies. In
the event the Directors of the Corporation were unable to accomplish either, the
Directors will determine the best course of action.

With respect to the securities offered by the Prospectus, this Statement of
Additional Information and the Prospectus do not contain all the information
included in the Registration Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933. Pursuant to the rules and
regulations of the Securities and Exchange Commission, certain portions have
been omitted. The Registration Statement including the exhibits filed therewith
may be examined at the office of the Securities and Exchange Commission in
Washington, D.C. or 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].

58
<PAGE>
Appendix - Description of Ratings

The Portfolio's investments may range in quality from securities rated in the
lowest category in which the Portfolio is permitted to invest to securities
rated in the highest category (as rated by Moody's, Standard & Poor's, Fitch's,
Duff & Phelps or, if unrated, determined by the Investment Adviser to be of
comparable quality). The percentage of the Portfolio's assets invested in
securities in a particular rating category will vary. The following terms are
generally used to describe the credit quality of fixed income securities:

Investment Grade Debt Securities are those rated in one of the four highest
rating categories or, if unrated, deemed comparable by the Investment Adviser.

Moody's Investors Service, Inc. - Corporate Bond Ratings

Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

59
<PAGE>
B: Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Corporate Short-Term Debt Ratings

Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:

PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.

60
<PAGE>

Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating
categories.

Short-Term Municipal Bond Ratings

MIG 2/VMIG 2: This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.

SG: This designation denotes speculative quality. Debt instruments in this
category lack margins of protection.

61
<PAGE>
Corporate Bond Ratings

Standard & Poor's Ratings Services - Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only in small degree.

Speculative Grade

62
<PAGE>
CC: The rating CC is typically applied to debt subordinated to senior debt that
is assigned an actual or implied CCC rating.

CI: The rating CI is reserved for income bonds on which no interest is being
paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

The absence of an "r" symbol should not be taken as an indication that an
obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

63
<PAGE>
Fitch Investors Service ("Fitch") - Investment Grade

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely
payment.

C: This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.

64
<PAGE>
A commercial paper rating is not a recommendation to purchase, sell or hold a
security inasmuch as it does not comment as to market price or suitability for a
particular investor. The ratings are based on current information furnished to
Standard & Poor's or Fitch by the issuer or obtained from other sources it
considers reliable. Standard & Poor's or Fitch does not perform an audit in
connection with any rating and may, on occasion, rely on unaudited financial
information. The ratings may be changed, suspended, or withdrawn as a result of
changes in or unavailability of such information.

Duff & Phelps Credit Rating Co.

Long-Term Debt and Preferred Stock Ratings

Rating Scale

Each rating also takes into account the legal form of the security (e.g., first
mortgage bonds, subordinated debt, preferred stock, etc.). The extent of rating
dispersion among the various classes of
securities is determined by several factors including relative weightings of the
different security classes in the capital structure, the overall credit strength
of the issuer, and the nature of covenant protection. From time to time, Duff &
Phelps Credit Rating Co. places issuers or security classes on Rating Watch. The
Rating Watch status results from a need to notify investors and the issuer that
there are conditions present leading us to re-evaluate the current rating(s).

65
<PAGE>

types. A "Cash Flow Rating" (as noted for specific ratings) addresses the
likelihood that aggregate principal and interest will equal or exceed the rated
amount under appropriate stress conditions.

Rating Definition

AAA

Highest credit quality. The risk factors are negligible, being only slightly
more than for risk-free U.S. Treasury debt.

AA+
AA
AA-

High credit quality. Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions.

A+
A
A-

Protection factors are average but adequate. However, risk factors are more
variable in periods of greater economic stress.

BBB+
BBB
BBB-

66
<PAGE>

Below-average protection factors but still considered sufficient for prudent
investment. Considerable variability in risk during economic cycles.

BB+
BB
BB-

B+
B
B-

Below investment grade and possessing risk that obligations will not be met when
due. Financial protection factors will fluctuate widely according to economic
cycles, industry conditions and/or company fortunes. Potential exists for
frequent changes in the rating within this category or into a higher or lower
rating grade.

CCC

Defaulted debt obligations. Issuer failed to meet scheduled principal and/or
interest payments.

Preferred stock with dividend arrearages.

<PAGE>

PART C
ITEM 23. EXHIBITS.

(a) (1) Restated Articles of Incorporation of the Registrant.(7)

(2) Establishment and Designation of Series of The 59 Wall
Street U.S. Equity Fund and The 59 Wall Street Short/
Intermediate Fixed Fund.(7)
(3) Establishment and Designation of Series of The 59 Wall
Street Small Company Fund.(7)
(4) Establishment and Designation of Series of The 59 Wall
Street International Equity Fund.(7)
(5) Establishment and Designation of Series of The 59 Wall
Street Short Term Fund. (7)
(6) Redesignation of series of the The 59 Wall Street Short/
Intermediate Fixed Income Fund as The 59 Wall Street
Inflation-Indexed Securities Fund. (8)
(7) Establishment and Designation of Series of The 59 Wall
Street Tax-Efficient U.S. Equity Fund. (9)
(8) Establishment and Designation of Series of The 59 Wall Street
Opportunities Fund. (12)
(9) Establishment and Designation of Series of The 59 Wall Street
High Yield Fixed Income Fund and The 59 Wall Street Broad
Market Fixed Income Fund. (13)

(b) Amended and Restated By-Laws of the Registrant.(7)

(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)
(a) Appendix A to Administration Agreement. (13)
(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)
(c) Appendix A to Amended and Restated Shareholder
Servicing Agreement. (13)
(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)
(c) Appendix A to Amended and Restated Eligible
Institution Agreement. (13)
(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)
(xi) Form of Expense Payment Agreement with respect to The
59 Wall Street High Yield Fixed Income Fund.(13)
(xii) Form of Expense Payment Agreement with respect to The
59 Wall Street Broad Market Fixed Income Fund.(13)

(i) Opinion of Counsel (including consent).(2)

(j) Independent auditors' consent.(14)

(k) Not Applicable.

(l) Copies of investment representation letters from initial
shareholders.(2)

(m) Not Applicable.

(n) Not Applicable.

(o) Not Applicable.

(p) (i) Code of Ethics of the Corporation. (13)
(ii) Code of Ethics of the Adviser. (13)
(iii) Code of Ethics of the Distributor. (13)

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 with Amendment No. 46 to this Registration Statement on September
28, 1999.

(13) Filed herewith.

(14) To be filed by Amendment.

Item 24. Persons Controlled by or Under Common Control with Registrant.

See "Directors and Officers" in the Statement of Additional Information
filed as part of this Registration Statement.

Item 25. Indemnification

Reference is made to Article VII of Registrant's By-Laws and to Section
5 of the Distribution Agreement between the Registrant and 59 Wall Street
Distributors, Inc.

Registrant, its Directors and officers, and persons affiliated with
them are insured against certain expenses in connection with the defense of
actions, suits or proceedings, and certain liabilities that might be imposed as
a result of such actions, suits or proceedings.

Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to Directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, officer of controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

Item 26. Business and Other Connections of Investment Adviser.

The Registrant's investment adviser, Brown Brothers Harriman & Co.
("BBH & Co."), is a New York limited partnership. BBH & Co. conducts a general
banking business and is a member of the New York Stock Exchange, Inc.

To the knowledge of the Registrant, none of the general partners or
officers of BBH & Co. is engaged in any other business, profession, vocation or
employment of a substantial nature.
<PAGE>

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.

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

Molly S. Mugler Secretary Secretary

Christine D. Dorsey -- Assistant Secretary

Susan Jakuboski Assistant Treasurer Assistant Treasurer

Linwood C. Downs Treasurer 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

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
(administrator, 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)

Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
(custodian)

[Forum Shareholder Services, LLC
Two Portland Square
Portland, ME 04101]
(transfer agent)

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 5th day of June,
2000.

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/ CLIFFORD A. CLARK Director
(Clifford A. Clark)

/s/ RICHARD L. CARPENTER Director
(Richard L. Carpenter)

/s/ DAVID M. SEITZMAN Director
(David M. Seitzman)

/s/ J. ANGUS IVORY Director
(J. Angus Ivory)

/S/ LINWOOD C. DOWNS Treasurer and Principal
(Linwood C. Downs) Accounting Officer
<PAGE>

SIGNATURES

BBH HIGH YIELD FIXED INCOME PORTFOLIO

By /s/ PHILIP W. COOLIDGE
(Philip W. Coolidge, President)

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated above.

Signature Title

/s/ J.V. SHIELDS, JR. Trustee and Chairman of
(J.V. Shields, Jr.) the Board

/s/ PHILIP W. COOLIDGE President (Principal
(Philip W. Coolidge) Executive Officer)

/s/ EUGENE P. BEARD Trustee
(Eugene P. Beard)

/s/ DAVID P. FELDMAN Trustee
(David P. Feldman)

/s/ ARTHUR D. MILTENBERGER Trustee
(Arthur D. Miltenberger)

/s/ ALAN D. LOWY Trustee
(Alan D. Lowy)

/s/ CLIFFORD A. CLARK Trustee
(Clifford A. Clark)

/s/ RICHARD L. CARPENTER Trustee
(Richard L. Carpenter)

/s/ DAVID M. SEITZMAN Trustee
(David M. Seitzman)

/s/ J. ANGUS IVORY Trustee
(J. Angus Ivory)

/S/ LINWOOD C. DOWNS Treasurer and Principal
(Linwood C. Downs) Accounting Officer
<PAGE>

SIGNATURES

BBH BROAD MARKET FIXED INCOME PORTFOLIO

By /s/ PHILIP W. COOLIDGE
(Philip W. Coolidge, President)

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated above.

Signature Title

/s/ J.V. SHIELDS, JR. Trustee and Chairman of
(J.V. Shields, Jr.) the Board

/s/ PHILIP W. COOLIDGE President (Principal
(Philip W. Coolidge) Executive Officer)

/s/ EUGENE P. BEARD Trustee
(Eugene P. Beard)

/s/ DAVID P. FELDMAN Trustee
(David P. Feldman)

/s/ ARTHUR D. MILTENBERGER Trustee
(Arthur D. Miltenberger)

/s/ ALAN D. LOWY Trustee
(Alan D. Lowy)

/s/ CLIFFORD A. CLARK Trustee
(Clifford A. Clark)

/s/ RICHARD L. CARPENTER Trustee
(Richard L. Carpenter)

/s/ DAVID M. SEITZMAN Trustee
(David M. Seitzman)

/s/ J. ANGUS IVORY Trustee
(J. Angus Ivory)

/S/ LINWOOD C. DOWNS Treasurer and Principal
(Linwood C. Downs) Accounting Officer